Warren Buffett has been all over the business press recently suggesting that the very rich, those on the Forbes 400 list, are taxed advantageously to the rest of the workforce. That it makes no sense that his tax bill as a percentage of income is lower than that of his secretary or housekeeper.
He is absolutely right.
It makes absolutely no sense that he, or I should pay a smaller percentage of our income than those who go to work 8 hours a day and have to save as much as they can to afford a vacation every year and stress out about whether or not they can pay their rent, mortgage or college for their kids.
Its also wrong that those who must live paycheck to paycheck find themselves paying the same amount of taxes on consumables as the super rich. That 8pct sales tax on life’s basic necessities is real time cash out of pocket, a far greater percentage of income and much more expensive money than the federal taxes we pay the following April 15th.
I would be perfectly fine paying a higher percentage of income, both in federal income taxes and as part of a consumption tax on luxury items. If Warren wants to buy or build a yacht for a hundred million dollars. Nail him with a 10pct federal tax surcharge. If I want to buy a Gulfstream Jet for 40mm dollars. Nail me with a 10pct federal surcharge above and beyond current taxes. There are plenty of items, from jewelry to 100k plus cars to 10mm dollars or more first, 2nd and 3rd homes. If you can afford to buy these kind of goodies, and choose to, cough it up.
Will i avoid the Gulfstream or Warren the Yacht because of the surcharge ? Will I drive a used car instead of my new expensive Lexus Hybrid. Nope. You are rich when you know that money is no good unless you can enjoy it. No one on the Forbes 400 or near by is going to let a 10 percent more increase in the cost of a luxury item get in the way of enjoying the lives they have always dreamed of.
The perspective that Hillary Clinton is offering that 250k in annual earnings qualifies you as rich is not only ridiculous but its a huge disincentive to those who work their asses off every day and have accomplished a salary that rewards their hard work. It also will impact millions who can least afford it.
I will tell you who will suffer the most if a “tax increase for the wealthy” starts at only 250k. The 50 plus year old executive who has spent the last 25 to 35 years working his or her butt off to reach a 250k salary. The 60 year old executive who is already scared shitless that their job could be eliminated tomorrow and that they have not saved enough for retirement.
Is that who you want to impact Hillary ? Men and women who are approaching retirement already in fear of job security and their futures ?
Not a good idea.
Instead, go after those of us who are really rich.
I’m OK with paying either higher taxes at my level of income OR paying a consumption tax on luxury items that cost more than the 250k threshold that Hillary thinks is the level of income that defines rich. But my agreement to pay more taxes comes with a caveat.
Right now I hate paying taxes because I feel like I’m giving money to a known crack addict. However much you give, its not enough. They will buy their crack, get a short term high and soon be back asking for more.
The federal government , whether in Republican or Democratic hands is the same way. No matter how much you give, they are always asking for more, more, more. Always spending on the ridiculous, without remorse and without the ability to restrain itself. Just like a drug addict.
If you are going to raise my taxes, I want somethings in return.
Raise my taxes by 1 pct, by every 1 pct you cut federal spending. Your choice of raising taxes on luxury items, or on annual income of 10mm dollars per year or more. Cutting spending means the government needs to raise less which allows you to raise the income threshold on which you charge this “Forbes 400 surcharge”
And I want 1 more thing. I want transparency. The way the government publishes information on money it spends ,receives and owes is a joke. No one in this country has any real knowledge of how much our country really owes. There are so many hidden and unpublished liabilities that if our country were a public company, someone would go to jail.
The accounting data of this country is public domain information. There is no reason why it can’t be published if not in real time on a government website, than at least quarterly. Money coming in . Money going out. Money that is owed to us and from us. It is currently being recorded somewhere , and someone has responsibility to collect it or pay it. So it can be published.
Then every quarter, our federal government can publish an Income Statement and Balance Sheet according to GAAP principles. It wont be perfect, but it will be a hell of a lot better than what we have today.
Without complete transparency, politicians will do what politicians always do. They find ways to play with our hard earned tax dollars and to put a lien on our current and future earnings, and that of our kids and grand kids just so they can get elected and re-elected. That’s just wrong.
So if Warren Buffett wants the Forbes 400 Rich to pay more taxes, great. Than Warren also needs to ask the two candidates he is supporting to do the same thing he would ask of any company he is investing in, show him accurate , up to the minute accounting data with transparent information supporting every number.
When that happens the government can take more of my money if they need it. My guess however is that when the citizens of this country see how much we really owe and where the money is being spent, and the short and long term implications of our politicians spending like addicts, they may start voting for those who respect the value of a dollar.
Will your candidates agree to this Warren ?
I also have one more tax suggestion that I think will create so many jobs in this country that it really wont matter what else our politicians do.
If we really want to stimulate job creation in this country, take the same approach to small business with fewer than 25 employees that we take to Internet taxes. Outlaw them.
No taxes of any kind on small businesses with fewer than 25 employees. No employer payroll tax. No state or local taxes. No taxes on earnings. Nada. The business owners will pay income taxes on their personal income they pay themselves, but not corporate earnings
The only taxes they would collect and remit are sales taxes, the employee’s portion of payroll taxes and of course they would still file personal income taxes on their individual earnings.
Today to start a business today is so frustratingly tax and paperwork burdensome that it requires hiring experts on taxes ,state and local filings just to get started. That is more of an impediment than trying to actually make the business work as a going concern. It also pushes businesses underground so that they can operate on a cash basis and away from the tax collector. I would rather have entrepreneurs think twice about their 26th employee than whether or not they think its worth the hassle to start up a licensed business.
Those are my ideas. I have no illusions that any could actually happen.
UPDATE: For some reason some people seem to confuse the Luxury Tax of 1990 which put surcharges on minimal pricing thresholds of 10k for jewelry, 100k for boats and 25k for planes with what I am suggesting.
Thresholds that low are not what I had in mind when i offered a 100mm dollar yacht and a 40mm dollar jet as examples. For those who would rather conclude rather than ask, lets just say that nothing with a cost of under 10mm dollars would be subject to a su
rcharge. . And I will remind everyone that I would only support this IF government spending was reduced and transparency was introduced. For some shocking reason bloggers who have linked to this post don’t seem to comprehend the whole of the post.
I think that $250k is a little low to be considered ‘rich’ by Obama’s plan. In the same vein the number of billionaires in the U.S. is too small to justify taxing them. Besides most billionaires do not get the majority of their income from a ‘job’ per se. Warren Buffett smartly keeps his salary at $100k to avoid a heavy income tax bill. I think the threshold should be $500k for individuals and $1mm for married couples. What you will find is that these people that fit in this income bracket will become better managers of their money and thus able to negate any tax increase. Capital gains tax is another story.
Comment by econ365 -
I enjoyed reading this blog mark cuban your the man.
Comment by Henry -
I have to say, I agree with much, and also disagree with much of what you\’ve written. I think not everyone in need of social services can be likened to a crack addict. While I fully agree that hard work should be rewarded, and that those who are willing to put in the time should be afforded the luxury, I think that once we\’re on the topic of fairness, the playing field at the outset should be relatively equal. A lot of this spending can be going to help those that have been born into very disadvantaged circumstances, that would love only to be given an equal chance to work hard and contribute. That being said, amen on the transparency point.
…
…
Ok I can\’t hold back – $250,000 is a ton of money, and I don\’t think turning a blind eye to so much of the world\’s tremendous bad luck poverty is right. I agree that people with only that amount of money (250k) can\’t be secure 100% confidently, but I think that\’s a very very high standard of living, and pretty damn secure. People should be rewarded for their hard work, but I think $250,000 is where guilt should creep in when thinking of the majority of human destitution, the kind of line where you\’d think we\’d pick it up a notch if we lived in a voluntary tax system.
Comment by Jenny Diamond -
Three Cheers for this blog. This discussion needs to be raised to higher levels in order for it to become important to candidates for office. So far there is at least one who thinks enough of this problem to be talking about it in earnest (Ron Paul)!
Comment by Brian Mudd -
Politico said the \”control group\” thought Huckabee won the Republican Debate — what\’s so astonishing is that the control group consisted wholly of CALIFORNIA WOMEN — that\’s right those independent-minded strong California Women thought Huckbee won — now this flies in the face of the Media\’s Conventional notion that Huckabee only appeals to the Evangelicals — so why isn\’t the Main-Stream Media covering this?????????? You can see the women\’s pre- & post-debate comments on Politico. http://www.politico.com/news/stories/0108/8235.html
More importantly, today Politico did a story on Women being a key factor in the election — so, this makes Huckabee\’s win even more ASTOUNDING & NEWS WORTHY. So, again, why isn\’t the MSM covering this?
Oh, and by the way — Huckabee\’s press secretary has been trying to get him on Hannity\’s show tonight — any success with that??????? Hmmmmm [Just in- they\’ve now said Yes for tonight, Feb 1]
How about a debate between Hannity & Huckabee — since Huckabee\’s not only running against the Republican Candidates — but the Media as well? Perhaps this could be held on another \”Fair & Balanced\” network — any suggestions??
Also, Mike is only 1% behind Romney in New National Poll!! So HOW DARE the media ignore and suppress him? For Poll Results see: http://race42008.com/2008/02/01/poll-watch-fox-news-gop-national/
Comment by liz -
Great post! Small businesses are the foundation of America. I like your idea of not having taxes for businesses with fewer than 25 employees as many small businesses pay taxes at the individual level so if you raise taxes on the \”rich\” you are going to hurt a large number of small businesses.
Let me ask this of those who want to tax the rich more: When was the last time a poor person gave you a job?
Comment by Joe Godfrey -
So with all of your media connections and $ wouldn\’t the best thing for America be that you form some sort of logical think tank that can go through all the BS and educate the voting public. This way when voters go to place their ballots they are doing it with knowledge of what they are voting. Imagine, a whole new business whose sole business is to dig through all the political spins and crap to get to the truth and you would have the media contacts to get the information in front of the voters and educate them about it.
Would love for politicians salaries to be capped at 2 x minimum wage – how can a politician represent anyone in financial aspects when they have nothing to worry about trying to pay mortgage, income taxes, property taxes (real estate), personal property taxes (automobiles, equipment, etc), utilities, etc.
And I also think attaching \’pork\’ or anything else to a bill is BS a bill should be proposed for one item per bill so that voters know 100% of what is being voted on and not some hidden agenda attached to it.
Taxes – they need to be simplified, flat rate or progressive rate – hard to say without the gov being on a budget and doing some impact research to see how things would work the best for all concerned both now and in the future.
Well, my 2 cents guess I\’d owe taxes on that if this wasn\’t the internet 😉
Brian
Comment by Brian -
Good piece. Sounds like a fellow Hoosier. Keep it simple stupid.
If the AMericans at the top really wanted help those of us who punch the clock they could give us our dollar back. Our dollar has been hijacked by private bankers. We need the wealthy Americans looking for a way to help the nation who helped them need to corner the silver and gold market. Invest this cache of finite wealth into the US depository. Allow our congress to print certificates against this commodity and take over the federal reserve bank. Give the people their dollar back. We do not net in intrest enough to offset inflation. We suffer for the good of a private bank. Help the people by loaning the government the money {gold, silver) it needs to print its own money!
It happened once in the great state of Indiana
Study the debate in 1913
Comment by Robert -
So who is your favorite for President?
Comment by Matt -
Mark –
I believe that your proposals are well-intentioned, but I really do not think they would work.
As a number of posters have already mentioned in the comments, such luxury taxes have been tried before and failed miserably (as you would likely agree – we live in a world economy and, unless every other country does the same, the rich will go elsewhere to find most of these luxury items).
Sure, you may have no problem paying an extra $10,000,000 for a jet or boat. However, many others will. Of course, I am no billionaire. I am no millionaire. But, if I were, I sincerely doubt that, if given the choice, I would give my extra $10,000,000 to the government when I could use that money to enjoy life, save for retirement or save for my children\’s educations.
I guess that, if you have more money than you can ever spend, money is less significant to your thinking. Most people here likely come from a different perspective than yours.
The idea that the \”rich\” (as you rightfully point out – that definition is being set at too drastically low of a level by many of the Democratic candidates) pay no taxes or less taxes than the poor or the middle class is ridiculously absurd. The \”rich\” typically pay the bulk of taxes. Moreover, the system of tax rates are set so as to punish you for making more money (i.e., the \”marginal rates\”… as your income grows, the amount you pay increases).
I am fortunate enough to make about $200,000 per year. While I am, by no means, living in poverty…I certainly do not consider myself rich.
Last year, for example, I paid approximately 40% of that income in federal income tax, state income tax, local property taxes, etc. (excluding sales taxes, which would likely drastically increase this percentage if I could accurately track the amount paid).
Most of my income is spent paying taxes, housing, automobiles (no Lexus, unfortunately), food and schooling for my children…. oh, and trying to save for my retirement and my children\’s college. After all that, I do not have much discretionary income.
So, it really irritates me hearing someone say \”yes, let\’s tax the rich more\” and \”the rich are not paying thier fair share\” when they define being rich as making over $250,000.
However, politicians use such mantras to score points with the lower and middle classes … Yet, when you take a look at the percentage of people\’s income spent paying taxes, it is no contest. The \”rich\” (or those that the politicians want to believe are rich) pay a greater percentage of their income than the lower and middle classes do.
Are there exceptions? Of course, look at people like Theresa Heinz Kerry whose only income comes from tax-exempt interest paid on millions of dollars worth of municipal bonds. However, the majority of the rich and upper middle class have no such luxury.
As such, your point of \”redefining\” what makes someone rich is very welcome from my standpoint.
Comment by Tycho Brahe -
The more tax money congress takes the more they spend. I\’m sure the founding fathers of our nation would not believe how bloated the federal govt. is now. Too many pork programs, entitlements and waste. Everyone looking for a handout at taxpayer expense. Govt. money means taxpayer money. I have handled my own budget all my life. I have zero debt. I nice positive cash flow that gets bigger every month. I collect interest. I don\’t pay it. I would love to handle the Federal govt. budget. I would cut the fat since I don\’t give a rip about special interests, no more highways and bridges to nowhere.
Comment by Kurt -
For 2006, the rich have paid more taxes than any other time in history. The top 1% richest taxpayers total returns equal to the total paid by the bottom 95% of income level taxpayers.
The middle class has paid about 1% more than previous years. Individual tax rates have decreased 5-10%. Why was more collected? More taxes were collected because we had more middle-class taxpayers.
Have you ever taken a economy class on the economy of scales. Lower the price and you have more buyers, therefore more income.
Because rich have more of their money to spend, they invest it in small businesses, like you have. Our corporations are the highest taxed in the world and this is convincing them to move away.
Warren Buffett was deceptive about his tax. Most of his received cash is from dividends, not income. He received one billion in dividends, paid 15% taxes for 333m taxes and 46m income at 35% income for an overall tax rate of 17.4%. Additionally, his secretary making 60k will only pay 10% taxes.
The dividend tax rates were deceased when the income taxes were decreased. This helps all those baby boomers, you seem to worry about, on their pension funds.
To further gull the world, Buffet and Gates took their millions and billions to setup a charity. First, they told the government you receive no taxes from this. Then, they gave it all to Africa. I don\’t think he is so concerned about our American population.
If you want to help people, I have a better idea. Instead of widening the class gap, listen to house and senate. When they make bonehead remarks, make your audience aware of it and show them how to write their representatives.
I listen to the House Republicans beg the House Democrats to cut back slightly a spending increase. This was not a cut on the budget, but instead of increase it 10%, only increase it 9%. The Republicans said this is how we lost our way, please don\’t do the same thing. The next time the Democrats took the microphone they keep talking about their entitled increase.
They will slow down the spending if the people want them too. They are spending like drunken sailors because each one of those wild spending sprees go to some area where they believe they need it or entitled to it.
Comment by Yvonne -
Mark
Please run for President.
No joke
Get involved. We need more of this sane thinking
Comment by Dan Cole -
\”2008 budget has 717 billion in military spending and 358 billion on non-military. The numbers are just mind blowing!\”
I think you should go read that again, the total 2008 budget is 2.9 Trillion. SSI, Medicare & SCHIP will consume 1.5 Trillion of that.
The funny thing about military spending is, our founding fathers created the Fed Gov in large part to provide for a national defense and yet that seams to be the only expenditure people are worried about?
Remember, the big 3 social programs are going to consume almost the entire budget every year within the next 15 – 20 years and now were talking about adding another huge one, I guess to put the nail in the coffin!
Question will be, how are we going to pay for the rest of the Government?
Comment by BrianR -
Cuban for President!!!! Cuban for President!!! As a small business owner I love your ideas and hope someday we could help get that done. GO MAVS!
Comment by Aaron -
This is a great post from Cuban and I respect your honesty and lack of a \”holier than thou\” mindset. I agree w/ both you and Buffet in that the rich do have a greater responsiblity to a point (definately not a lower responsibility as our current tax code codifies).
My comment relates to your issue of transparency. Our govt passed the SOX (Sarbanes Oxley) to ensure transparency and honest reporting of public companies. Imagine if our govt was forced to comply w/ SOX?? I\’d bet money (certianly not enough to by Cuban another 40mm Gulfstream) that our govt spending would decrease and we could better stablize our federal financial position if they were forced to comply w/ the similar legislation that they levied upon our public companies.
I, like Cuban, don\’t think I\’ll live to see that day (and I\’m only 32)…rhino
Comment by rhino -
Good points overall, but I would hate to see the incentive for becoming rich become marginalized.
Comment by Michael Covel -
Mark: You have some good thoughts on tax issues in America. The $250k is way too low. What do you think about a flat tax?
RC
Comment by RC Bauer -
\”
You have to show you\’re a decent money manager before we give you any more money to burn. That\’s where your demand for transparency comes in. When we can see how the money is spent, and they\’re (whether the \”they\” is a politician or the MTA) must be accountable for the money, must use it for the services for which they are intended instead of padding their own pockets, and do not receive raises until they start showing some decent money management, maybe we\’ll see some improvements.\”
Transparency…. for what. What are \”we\” gonna do if they over spend? Not a damn thing. Vote em out after 2 or 4 years? So what they don\’t care. and the majority of the people do not vote. They do not have time to keep up with this BS. They / We have lives.
Comment by maxsportz -
\”\”\”\”If you feel you or Warren\’s tax is too low, there is nothing stopping you from throwing in a little extra. Or is it only OK with you when it is made compulsory?
Gifts to the United States Government
How do I make a contribution to the U.S. government and how can I return my tax relief payment to the Treasury?\”\”\”\”
Anyone who would give their money over as a gift to these drunken sailors should just set themselves on fire .
Comment by maxsportz -
your statements on taxes was very well said. you would be a great senator or president Mark. To have transparent records should be expected of the government seeing they require it of us. That would get rid of a lot of criminals in high places. MERRY CHRISTMAS, REMEMBER JESUS IS THE REAL REASON FOR THE SEASON!!! GOD BLESS 🙂
Comment by samuel leos -
Mark,
Great insightful idea however; the political transparentcy you are asking for is impossible to measure in todays political arena. The spin doctors of each party will cloud the truth and the objectives you have laid out will encourage them to tell half truths so they can continue pork barrel politics and earmarks! It\’s all about the Gorden Grecko mentallity \”GREED IS GOOD\” as long as the (politicians in power)get theirs first (perks, money, power, entitlements) the little people can have what ever they can get!
It\’s sad but true and I know deep in your heart you know it!Don\’t give up —- if enough of you deep pocket guys (people with business savy not government employee types)jump in and help solve this problem the USA will be better off.
Thanks for caring enough to at least provide food for thought!
Comment by Ed Reynolds -
Mark, I like two-thirds of your argument:
* more transparency in government spending.
* reduced government spending.
I don\’t like the last third:
* higher taxes if first transparency and reduced government spending is met.
Why shouldn\’t we insist on the first two now, without carrot of higher taxes (even if just on super rich)? Its the failure of the first two items that are causing the problems. If we fixed those (and maybe introduced some other incentives such as your no-tax-on-small-business idea), we\’d achieve success at almost everyone\’s definition.
Comment by Dan -
Dear Mr. Cuban,
You\’ve paid many millions for the ownership rights to the Mavericks. You pay more than your minimum requirements for several assets (Michael Finley, Nowitzki, Dampier, Stackhouse), so here\’s your chance to illustrate that you stand by your word: publish the scan of the CANCELLED CHECKS that you send to the gov\’t that represent the surcharges of those assets that you have which you paid more than ten million dollars for (which would represent most multi-year contracts for your NBA employees).
Saying that it only applies when there is \’cuts in spending\’ is such a weasly way to avoid things….I might as well say that I\’ll donate everything I own to charity, but only if there\’s world peace. Wow, very big of me, eh?
Pay up. Nothing whatsoever is stopping you. \’cept you.
Comment by RW -
I agree with Mark and understand that transparency will not happen because the elected politicians will not relinquish their only bit of power. They, especially Democrats, will never be satisfied with the amount of tax dollars they collect though Republicans have shown there isn\’t a tax dollar they won\’t spend either. Have you ever noticed they sell a tax using an unpopular item (this year it\’s tobacco) as a means to fund their item and when the tax revenues go down, they find another source instead of reducing or eliminating the program for which the tax is created an ridicule those that would oppose the new tax revenue source?
Im off my soapbox and back to work!
Comment by ChrisP -
Mark, you are spot on with your comments!
Comment by Jerry -
Mark
I really appreciate your comments. I am neither in your league, nor do I make 250K but I would gladly pony up if I thought I could help this country and there was a sense that our elected officials were better stewards of our money and our futures.
Comment by Steven -
This is garbage. If you, Bill Gates and Warren Buffet want to pay more taxes–go right ahead! As mentioned several times above you can send your check to the IRS right away.
The fact is both Gates and Buffet who also advocate higher taxes have \”selfishly\” directed their own money into a private charity. Most likely they do this because they think their money will go further–which no doubt is true. It\’s ironic they see fit to dictate how everyone else\’s money should be stolen from them, but won\’t voluntarily practice what they preach.
You make me so angry in these reckless comments. And you\’re really doing a disservice to the very ideas and liberties that made it possible for you to make so much money in the first place.
Comment by Kevin -
Cuban….I think some of your ideas have merit. I suggest you look into presidential candidate Ron Paul for the 2008 election. Our government is inherently flawed….that\’s the nature of government. Ron Paul is the only candidate that supports our constitution and has the voting record to prove it. You know what you\’re getting with Ron Paul and that is more freedom and less government control. How can you not like that?
Comment by Jared Holland -
Mark,
Great piece ! THANKS. Why is it that some people get defensive when some of us demand ACCOUNTABILITY from our government ? How about applying the same Sarbanes-Oxley\’s rules to the govt ? How can we expect to continue being the most successful country in history is our govt\’s finances are laeding us into chapter 11….? Wasn\’t that one of the reasons the powerful roman empire went under ? If the people of this country is willing to fool themselves by hiding the truth about our long-term liabilities, is not that a mega reason for panic and major concern, beyond the current sub-prime crisis….? Peter Peterson\’s latest book, \”Running on Empty\” forecasts tens of trillions of dollars in unfunded liabilities by our federal govt. Nobody is addressing this issue. Why not ?
Paul
Comment by Paul -
I have a large income (not like yours though)and pay a lot in taxes right now. Many of my friends in the same wage bracket compain about paying their taxes but I don\’t. I am happy to pay my share because if taxes are the cost of being an American and living in this country, we all should smile and pay. I thank the lucky stars that somehow I was born here and not in Iraq, Columbia, or even Mexico. No – if you make enough to pay tax – be happy.
What we have to complain about – and What Cuban is right on the mark with is how the money is spend. I absolutely can\’t stand career politians. Anything for a vote or to scrach my back. We all have ourselves to blame as we keep voting these crooks into office. This next year we can change that – I hope.
Comment by David -
Tim Duncan has ovaries.
Comment by joe -
Does it make sense to anyone to require Mr. Cuban to pay $10 for a gallon of gasoline, while the rest of us pay $3? I hope not. Should he pay $100,000 for a GM car, while we pay $20,000? Taxes should be payment for constitutionally mandated services from the govt., just like paying for lumber at Home Depot. Therefore, we should compute how much these services cost, divide by $146 million taxpayers, and each taxpayer sends in a check for that amount. If that\’s $100, that would be $14.6 billion per year. I have yet to hear anyone refute this logic, because they realize that the rest of their lives operate on it. Thanks to Walter Williams for making all this clear.
Comment by Kirk Dolan -
That\’s the sanest, most well-outlined position I\’ve seen on taxes in a long time.
Something that goes along with that, sparked by your \”I want something in return for my taxes\” got me thinking about things like, here in NY, Con Ed who has case after case of zero maintenance, human error, and then gives their top execs raises while service goes down and by raising bills by 17%, and Metro North and the MTA, who keep screaming poverty while not giving service: If you want to raise prices/taxes, you have to earn it.
You have to show you\’re a decent money manager before we give you any more money to burn. That\’s where your demand for transparency comes in. When we can see how the money is spent, and they\’re (whether the \”they\” is a politician or the MTA) must be accountable for the money, must use it for the services for which they are intended instead of padding their own pockets, and do not receive raises until they start showing some decent money management, maybe we\’ll see some improvements.
I like your comment about taxes feeling like they\’re going to a crack addict right now. I\’d never thought of it in those terms, but it\’s fitting.
Comment by Devon Ellington -
Excellent comments on a subject that causes so much concern for everyone. One other aspect of this subject that very few people know or understand is that our wonderful gov\’t. friends (at all levels)have a little secret that is never discussed in public and never brought to the attention of taxpayers.
Turns out our wonderful public servants have another complete set of books that show the TRUE fin\’l condition of their particular entity called a \” CAFR \” aka Consolidated Annual Fin\’l Report which is normally created at the end of the fiscal year accounting period……..think about it, isn\’t all we ever hear about is the BUDGET figures at the beginning of the year but we NEVER hear the actual revenues and expenses turned out to be?
Based on the research of people like \” Walter Burien \” and others at the very same time we\’re inundated with even more tax increases at various levels, the gov\’t entities are sitting on huge surpluses of $ that are used to prop up the stock markets as well as provide funding for a fair number of \”private placements\” to be sure.
Keyword CAFR in your favorite search engine and prepare to be even more shocked and hissed off at these people the next time you write out that payment to your favorite taxing entity.
Comment by WC -
Mark, you make way more than I do and what you pay in taxes compared to me is disgusting. In no just society would you be paying anywhere near as high a taxes as you are. The politicians want to take from the rich to buy votes by pandering to the greed of the middle and low income classes.
I refuse to try and get the state to take from those who have made smarter financial decision to cover my failings. I\’ve been below the poverty line and my current job puts me comfortably in the middle class. That job is coming to an end just after Christmas and I may be slipping back into that poverty class again… this isn\’t your problem Mark and you have no obligation to do anything about it unless you want to hire me to do productive work for you.
The rich would be paying WAY to much if they had a 0% income tax… just from the regular sales tax on whatever they purchase. You rich guys and gals are the force that allows the less talented and intelligent to have a comfortable living rather than starving in a ditch, so you have no reason to feel guilty about what you are already doing.
Comment by Clint Johnson -
Taxes inherently lead to inefficient spending. People are more responsible when handling their own money, than when they\’re given others\’ money. We need less taxes, rather than tax the wealthier people more. Also, ideas of an efficient gov\’t than will have balance sheets & integrity are naive and unsupported by history, economics, nor human psychology.
Comment by Vincent Freeman -
Cracking post Mark.
I\’m not normally a fan of your rants but this one has real substance.
Congratulations!
Comment by Neil Dobbins -
I like how you ask for the government to change as well, but I must say although I am not rich I disagree with your idea of a luxury tax. I don\’t like the idea of what is SAYS. It says that if someone has a lot of money then they should pay more taxes becuase they don\’t deserve it. Rich people DO pay a form of taxes. Outrageous consumption like a 100 million dollar yacht creates jobs. Also, a person who has that much money to spend isn\’t going to nickel and dime you (unless they are Donald Trump) they are just going to say \”make it happen\”. This leads to overpaying which IS taxed. The crew to run it and upkeep it along with the fuel and port charges all are taking money from the rich. The real problem you didn\’t quite hit as hard as I think you should have is that in any business or personal finance you have 2 factors. Income and expenses. The government spends far too much time trying to decide WHO (what special interst group) should pay for the expenses rather than cutting the expenses out. It starts with apathetic and uninformed voters. That gets passed on to lifers. Those are the politicians that think that being in politics is a career. We should never allow this. Being an elected official is not a permanent career choice. It leads to cronyism. Each bill should be for one thing and one thing only. No more pork. Another piece of this demented puzzle is special interest groups that serve their own interests and essentially corrupt the system and create an imbalance that is spoken to only by money. Sooooo… here is my proposal:
Increase taxes on special interest groups and donations and fundraisers for campaigns. Get these special interest groups to pay out the wazoo. Then take the lifetime benefits away from the politicians. No more top notch healthcare. They get the same as everyone else: purchase your own or get on a plan with a co-pay. No more huge pensions. You get NO pension. Why? Because you should have a REAL job that contributes to society OTHER than being a representative. What about their pay? It should be the average of their constituents. If your state average pay is 33K, there you go. Wanna vote on a pay raise? Nope. It goes on the ballot and the conditions that the budget must be balanced. I do agree with your point about GAAP accoutning principles. Better than what we have now.
I feel that Warren\’s idea is as ridiculous as when they wanted to take all the money from the oil companies. Now those companies are not making as much and nobody says anything and gas is STILL expensive.
Mark – could you do a blog post about how electric cars should be the next bog thing because we already have infrastructure?
Comment by bill ross -
How about we stop any tax increases, and start managing the taxes our government is already collecting. If we stop building weapons of mass destruction, and handing money to rogue states, we can drastically reduce taxes for all of us.
Comment by Mitchell -
Mark, who will you be voting for in the 2008 election?
As someone who respects your opinion and agrees with many of your statements, it would be interesting to hear who you think would make a good candidate.
Thanks and everyone reading this please go to http://www.NandosPeriPeri.com for the best African Birds-Eye Chili Sauce in the world!!!
David R.
Comment by David R -
Mark,
I am not a proponent of taxes of any type but I realize they are necessary for any government to function. I agree with you that taxes are especially burdensome for the working class and payroll taxes are a huge impediment to any small business. This is why I support the Fair Tax. It addresses everything you mention except the transparency. We should all be taxed on our consumption not productivity. If wealthy Americans want to buy multiple homes or luxury cars, they will pay more taxes. The power is in the hands of the consumer not out of touch politicians. Underground economies would contribute to the system. Additionally, small businesses would be free of payroll taxes and the IRS could be reduced significantly in size and budget saving taxpayers billions more in annual spending.
Taxing the rich has an easy ring to it because there are so few rich relative to the general population. But one must remember that the entire income tax system was originally proposed as a tax on the top 1%. That sounded good to people at the time. Amazing how many of us now represent the top 1%.
Pitting the \’haves\’ against the \’have nots\’ is a dangerous and divisive game especially when the definition of \’haves\’ can be adjusted again and again but vote buying carpet-baggers.
Interesting perspective. Thanks for the food for thought.
Comment by Mike -
Mark Cuban for President? Well, it would probably ruin him….but Mark Cuban to lead an Anti-Federal-Waste-Campaign I think would do wonders.
The latest on the steroid abuse……I guess why is it that we have an elected federal official as a steroids abuse investigator?? Should they be doing steroids, no, but what the heck business is it of the federal government to waste federal tax dollars whining about it? Who cares what the feds think?
The feds go after steroid abusers, but not banks who send out credit card and mortgage offers to everyone multiple times a day…..with identity theft and the credit crisis looming, don\’t you think the feds ought to curb banks over zealous credit baiting?
We\’ve got CEO\’s and the like walking away from companies with millions of dollars and many for a job not well done…..anyone can raise profits by laying people off and closing companies or moving companies to avoid high labor costs. Wheres the feds trying to make it reasonable for companies to stay in the US?
How about American ingeniuty and innovation without the beauracratic bull crap? Where\’s it all gone? We\’ve given up our American culture for a follow the feds, theyll show us the way lifestyle. We\’ve dummied up ourselves and everyones so busy chasing their daily routines they don\’t have time to fix the federal government…..how discouraging for the younger generations! Pursuit of happiness??? Good God man, fire the feds! Wipe the slate clean and start new…both parties!
The feds daily verbage impacting the market is getting old too…..\”its about a 50/50 chance that we\’re heading for a recession\”…..duh, those odds i can figure out! Good God man!
Tony Soprano had a good gig going……
Comment by Bryan -
Mark,
Great read. I agree with making the goverment more accountable for thier spending. As anyone with a household knows there is only so much money to go around. You make a budget and stick with it. Do you think I can walk into my employers office and ask for a raise simply because I fail to follow my budget and am coming up short? This is what our goverment does, comes up short then asks for more money, or even demand it.
First and foremost Im a flat tax advocate. Personnaly, I feel this is the fairest tax system available. I believe we need to demand that our goverment become accountable for thier spending. The goverment is a business and needs to be run as such. We as American citizens are its stockholders and as any invester would we should demand fiscal responsibility.
Ive read some posts on here that perhaps if Mr.Cuban was so willing to pay extra taxes perhaps he should give a gift. Seriously!? Since drug addict spending was mentioned here would you be willing to give a drug addict more money as a gift knowing full well that money was going to be used for more drugs?
Mr Cuban you have my respect for a least standing up and saying what you believe.
Comment by Roy -
When I hear ab taxing the crap out of luxury items I think do rich people build and sell luxury items? My guess is that every employee that builds a luxury yacht isn\’t rich so when you tax those items you\’re hurting the people that make those items. Maybe the rich will buy those items anyway, but taxing does cut the margins on the manufacturers and increases the burden on American manufacturers competing with overseas businesses selling the same products.
Comment by Jay -
The government has recently made available a searchable database, powered by OMB Watch, for fed spending. Coincidentally called, http://www.fedspending.org
The beauty of these open db of fed spending, is that it reveals things like this:
http://radaronline.com/exclusives/2007/12/bush-secret-shredding-soars.php
Comment by Robert -
Nice post. $250K may be rich in Little Rock, Arkansas , but I can assure you it is not rich in San Francisco, Chicago, Seattle, Boston, Atlanta, New York, etc. Pick any major metro, and see how far you go with $250K in terms of housing, paying for college for kids, retirement planning, etc. Can you make it? Of course. People make it on far less. Are you \”rich\”? Hardly. This is what Hilary doesn\’t understand.
This is why the Democrats continue to lose in the long run. Many people, such as myself, are sympathetic to some of their views. When, however, you start talking about raising my taxes and calling me \”rich\” on an annual income, which may not be that secure, of $250K…I vote republican. It is called self preservation.
Easier solutions exist. Get rid of the carried interest issue with hedge funds for one. This is totally ridiculous and eliminating it would not slow down hedge fund activity one iota. Do you really mean to tell me that people are not going to pursue an activity where the top income in 2007 was 1.7 billion dollars because they have to pay the same taxes as the rest of us? Please.
Comment by Stuart -
Fantastic… I agree 100%. I often wonder what the candidates *really* think.
Comment by Beth -
Mark, I completely agree with you. How do we find politicians who will respect the value of the dollar and spend our taxes like a real business would? They all seem the same to me and there is no real leader to chose from. How do we find them?
Thanks…..Don
Comment by Don Conroy -
thank you – common sense–
you are probably too young to remember the forbes study about gov spending,but it was beyond belief as to the stupid spending-help
Comment by d lankford -
I agree completely with Mark\’s comments.
I am one of those people who worked my entire life to reach the $250K level (barely). I live in California and it is not nearly as much as it might sound like to some people in some parts of the country.
My taxes are already overwhelming. Between the state and the feds I already pay more than half my income in income taxes, to say nothing of all the other taxes.
If they raise the taxes again I\’m going to give it up and move to Costa Rica. It is stupid to continue working 60+ hour weeks to watch most of it go to the government.
Warren B. is simply an idiot if he believes that my secretary pays more in taxes than I do – either on an absolute or percentage basis. I wonder which planet he is living on? He either is a complete idiot or is simply a liar. He is far to intelligent to really belive that completely stupid statement.
Hey Warren, I will take you up on your million dollar offer. If he believes that statement is true why did he only make it to a limited group of people. If he believes that then he should stand up and make the offer to the world. Lots, and lots, and lots of non-billionare CEOs will sprint to take him up on it. Dave.
Comment by Dave -
What ever happened to the balanced budget concept? Instead of raising taxes to match spending, why not lower spending to match revenue?
Simple – but it works; ask any business executive!
Oh, yes ….. how about putting a lid on the pork as well!
Disgusted Taxpayer
Comment by Walt Dellapina -
Mr Cuban you really understand; probably because you didn\’t come from a \”priviledged\” upbringing. I will expand on your points with my thoughts.
Where to begin…
Transparency – has to be from the bottom up. All elected officials(as well as those running for elected office) must not only provide their tax returns but post their budgets. Income, basic bills, discretionary expenses, & debts. If someone is unable to manage their personal finances and are broke – owe more than they make; why would anyone vote for or allow them to manage our tax dollars?
All govt departments (local, state, and federal) must publically post monthly budgets of what they take in and what they spend. Both the projected and the actual. This needs to go all the way up to the presidency.
Do away with classism. Until you clear 10 million annually you aren\’t rich in america. We need to let go of the myth that people making $100k, $200k, or even $500k are rich. We need to understand what true wealth is. Anyone who has a positive net worth is wealthy. All debts (including mortgages) is subtracted from your income and assets. I can\’t help but wonder what the true wealth of the \”uber\” rich is. Probably less than is reported.
Corporate Taxes – all the negative comments just go to show how ignorant most people are when it comes to running a business. While your threshold of 25 employees makes up the majority of companies in the US, I fear that the short-term pain would defeat your idea before the long term benefits manifested themselves. Too many americans do not know how or are willing to endure the sacrifices necessary to get our economy healthy. They can\’t even make sacrifices to get their individual finances in order; demanding that the govt bail them out – whether it is student loans, mortgages, consumer debt, welfare, social (in)security, healthcare, etc.
You speak truth and common sense – unfortunately those virtues have little value anymore.
Comment by LRH -
Mark,
Thanks for a well written and thoughtful article. As a Chicagoan, I look forward to your using the same logic in buying and creating a winning team out of the cubs.
Comment by george -
oops..my bad, here\’s my full comment.
I love my country, I have 3 kids, an MBA that I earned and served my country as an enlisted Air Force member. I love my country. I\’m willing to pay more taxes. I make less than 250K, but I want the transparency. Bush veto\’s bills with Pork…and then pays the price politically because he veto\’s the main purpose of the bill. I\’m looking towards the future, transparency rules. I love the less than 25 employee no tax. This would inspire many. Let\’s Roll!
Comment by David Armstrong -
I believe you are right on the money. The Fed Gov is a crack addict, and if they had to product an income and balance statement every quarter, the american public would wake up and realize that we are for the most part throwing money down a hole.
I have to live and die on how my business is run, and do not spend on items I cannot afford, or need.
It is refreshing to hear someone in your stratosphere with this opinion.
Comment by Ron Sheldon -
I love my country, I have 3 kids, an MBA that I earned and served my country as an enlisted Air Force member. I love my country. I\’m willing to pay more taxes (I make
Comment by David Armstrong -
Everyone seems to be missing the real point: The US government (as well as state governments) are wasting the tax dollars they are currently receiving. Our tax dollars should not be spent so freely on social programs. Further taxes of any kind should not be required. The requirement should be that our governments tighten their belts on the programs that already exist.
Our national debt is strangling this country. Our government is not able to \”live\” on the money it makes, and resorts to borrowing money to pay for things that are not significant enough to make any real difference to it\’s citizens or the country as a whole.
The government should not put themselves and our tax dollars into saving corporations that have made mistakes. It is not their job to bail people and companies out of trouble they have gotten themselves into. Build your house or decide to live in a flood zone, expect to get flooded and expect to loose everything you have. Do not expect for the government to save you. Your company made some bad decisions and may go bankrupt, sorry, but that is your fault, not the tax payers fault. You want to know why a tomato is red? Spend your own money to find out; don\’t ask for a million dollar government grant of our tax dollars to find the answer.
As stated before, eliminating taxes on small businesses would not only increase commerce, and competition, but would create jobs, make more jobs higher paying, and generate more tax revenue from income taxes on the increased pay employees of small businesses would receive.
Many high school math classes have proven that an income \”flat tax\” would harm the poor and middle classes the most, and benefit the wealthy, not to mention, it would not generate enough tax revenue to keep pace with current government spending. Forget the flat tax, it will not work.
Over taxing the rich is nothing more than Socialism and redistribution of wealth. History has proven that Socialism does not work. It is also known that if you take all of the money from the rich and redistribute it to the poor, that those that were rich before will earn back all of their wealth from the poor – the rich will be rich again, and the poor will be poor again. Wonder why? The rich learn HOW to earn their wealth, and the poor did not. We are a country that is lucky to have a middle class and a population that has the ability to earn their way to wealth.
Our government needs to learn how to spend within its means, just as it people are required to do.
Comment by Shane -
Well reading all these comments is like standing at the urnal in the men\’s room reading the writing on the wall…It\’s all a bunch of crap until we as a unified voice of the American People tell the leaders of this country we are not putting up with anymore irs,tax rules, exceptions and loop holes or whatevers that requires the American citizen to spend time and money each year trying to figure out…we need just on flate sales tax nationwide on all item and totally elminate the federal and state income tax…and totally abolish the irs…a agency that cost billion to run and produces no usable goods or services…Until this happens it the same old story,same old song and dance….
Comment by Michael Thingstad -
Love the transparency, and please keep screaming about 250,000 income NOT being \”rich.\” My wife and I have busted our asses for 25 years with education, military service, and constant hard work to get close to the level. And now Hillary wants to spank us, no thank you. I\’m not crying about my sacrifices, hell I like work, but Mr Cuban keep screaming, I don;t need another mouth to feed, still have two of three tuitions to finish!
Unfortunately you are correct; nothing will be done. Your give me 1% and I give you 1% to the government is well thought, boldly put and sure to be ignored. My years in service taught me that there is no real accoutnability for money that comes from the public teat. Shameful.
Comment by mark -
Mr. Cuban,
Why can\’t it be THAT SIMPLE ? I have a small business in the midwest my Father started in 1962, and I firmly believe there is no way it could be done today because the govenment has become so stifeling to small businesses with tax, after tax,and then more taxes. SOMETHING MUST CHANGE. But that person could never win an election because of what Washington has become. Thanks for letting me vent on line.———- Tim
Comment by Tim Fischer -
Mark,
Great thoughts. As a young, liberal tax lawyer (is that possible??), I think you are on to something here. I cannot believe how complicated the feds have made it for the \”little guy\” to simply start a small business. I see it every day and I am astonished at what great, young business minds must go through simply to get their ideas/concepts to market.
A consumption-based tax is a move in the right direction. If you have the money and want to spend it, fine, pay your tax. If you have the money and don\’t want to spend it, fine, die with too much money. The problem is, those who design the tax code (both Republicans and Democrats) all want the same thing…less tax on the wealthy. Don\’t be fooled by party affiliation.
The argument that people in your position should simply donate more money to charity is simply asburd. True, we should all give as much as we can, but that still does not resolve the disaster our lovely Congress has created (the Internal Revenue Code). Simplify the damn thing and ease the burden on the \”little guys.\” I have always felt that I do not pay enough taxes, and my conservative friends tell me that if I am not paying enough, donate the money to the government. Again, is it socially responsible to reward a crack addict with free crack?
As for transparency, don\’t we all wish? I cannot believe that this country (which, let\’s all agree, is a business), cannot figure out how to audit itself…while at the same time, it demands accountability of all of those it taxes.
I appreciate your position and only wish the government and the other wealthy (no, not those making $250k) would share in your beliefs.
Comment by Kyle -
Mark,
I couldn\’t agree more. I think transparency is so needed to gain trust and honesty. This country needs to review it\’s overseas spending, especially our donations and foriegn aid. How can we give money to others that we don\’t have? Just keep taxing the American people and lives around the world keep getting better? Our finances ned to be fixed, who is going to step up?
Nick B
Comment by Nick Battista -
It\’s obvious that Mark Cuban has not been stricken by the deadly virus \”Potamac fever\”. After 10 seconds of watching Warren Bufffoon and his new girlfriend, the esteemed Senator from Arkansas, er- New York, I had to turn it off and will never watch again. It was most refreshing to see that someone with money is not all about themselves and has some common sense. I applaud you. Unfortunately, I will bet my house, which is quite comfortable due to working 7 days a week and 12 hours a day, against a Sears puptent that NO ONE in politics will ever vote for this. I\’m afraid you tried to ruin a perfectly sound system like DC with facts. But thanks for your time and effort. I know this wasn\’t your intent but I\’m now a Mav\’s fan. Augie Grathwohl
Comment by august grathwohl -
I cannot agree with you more on the taxing of small businesses. I grew up in a family owned business and my parents literally worked so hard that they have a hard time enjoying the fruits of their labor because of health issues. I know that raising 4 children and paying taxes were just about all they could handle in addition to building their business.
I also have started my own business and you are so right about having to hire experts just so that we operate within the law on taxes and regulations. I sometimes question whether it will be worth the effort but so far the positives have outweighed the negatives.
There is no question that I would stand a better chance of growing my business faster if the tax structure was tailored for startups. Right now I want to invest in a new piece of equipment and another employee but the additional liabiaties are making the decision very hard.
I agree that if I was able to afford a luxury item then I wouldn\’t mind the additonal tax.
Comment by David -
I am impressed. Very good ideas. Some suggestions, if you don\’t mind. Base the consumption taxes on citizenship/residency so that regardless of where you buy from, you are subject to the tax. If you would prefer to give up your US residency to save the 10%, that\’s always your choice. Also, tie the tiers of the programs to the economy. Whether it\’s inflation, cpi, or some other determinate figure. Bracket creep is killing me. Two incomes, fair salaries, AMT penalty! As my kids say \”not fair\”.
Comment by Steve -
Mark, your comments reflect common sense and consideration for others. Two traits many of our government entities, especially the Federal one, seem to have lost. We will all benefit if they find it again, but from my perspective, sorry to say, confidence is low. You\’re correct, Republican or Democrat, it doesn\’t seem to matter. The ship can be righted, but it will take years, and be in small increments. Hopefully, we can start a reversal, like the ecological reversal we need, before reaching the tipping point.
Comment by John -
I think everyone needs to focus on the second part of Mr. Cuban\’s proposal. If everyone realized how much money this government wastes, the first correction would be in government spending. The U.S. economy would function alot more effeciently if there was transparency in the financing of our government. Because there is no accountability in the legislature or executive branch of our government, our elections have become popularity contests where the candidate who promises the most government aid without any responsibility for the deficeit spending it creates is the winner.
There will always be \”have\” and \”have nots\” in this world and this dilemma will never end. Mr. Cuban\’s proposal is the first step in trying to get the government, and its politicians, to be responsible stewards of our money and resources.
Comment by Tim -
Mark Cuban for President!!
Comment by Amy Krut -
Mark – Amazing Blog – you are RIGHT on the money, with the regulatory impediments to starting a business.
As a business owner (manufacturer) with 60 employees, I was sick and tired of all the regulation, all the local/state/federal taxes, regulation, not to mention legal issues, patent problems (you\’re guilty first in USA since you have to defend yourself), etc).
When my suppliers of steel from China no longer wanted my dollars (they preferred Euros), when pressures on gross margins came from imports, when energy prices skyrocketed (Thanks Mass Electric), when healthcare costs exploded to the upside, I gave up, and sold out. Now, a Korean company has acquired us, cut our workforce to 25% of what we had (One employee had been there for 44 years). I have a job (and I\’m not ever really worried about finding another job), however, at 38 years old, I can assure you I will NEVER start another business in the USA. Not with more than one employee or in more than one state. In fact, in Massachusetts, we now have more regulation with healthcare, and even though we\’re in compliance, it takes more time/money to fill out the paperwork. Heck, to even shut down a company in 5 states, I need to fill out ridiculous amounts for forms. Not to mention many of the states are desprate for money and audit you all the time wasting more time, and costing more money in accountant fees). The funnest was the Department of Revenue of Massachusetts outsourcing their collection agency to Houston. Costs to compete are too high here in Mass, evidently the Mass state government must realzie that when they outsource.
My grandfather started a plastics company, and was quite successful with 40 patents, my father (an orphan), started a successful business. I worked in a 3 person startup, and eventually worked my way up and obtained control of a 10MM/year business.
I\’m the type of person that the government would want to start a business. Carnegie Mellon graduate, business experience, profit-oriented, technology addict, access to capital. It\’s just not worth the risk without huge gross profits to balance the increase costs of regulation and risks.
My two cents – I agree with you, and enjoy the blog.
Went to a Mavs/Celtics game last year courtesy of Southwest Airlines (I fly alot) – nice to see you there supporting your team. See you in the NBA finals!
Regards,
Brad
PS I\’m an engineer, I don\’t spell very well, so please forgive my mispelling as I just follow my stream of thoughts without spellcheck.
Comment by Brad W -
I am learning so much from these blogs. Until last year, I failed to pay attention to what was happening around me. I paid my taxes and assumed that all was well and good. Call me a reformed idealist. At least people are suddenly paying attention to the economy, taxes and the gov spending instead of American Idol.
I don\’t think we need more tax laws. I like the fair tax. I like the fact that the illegals, drug dealers and pimps will be forced to pay taxes. I like that fact that it seems to hit everyone equally, rich or poor. I like the fact that it doesn\’t single out any one business for extra taxes and I like the fact that it gets rid of the IRS. That should save millions, if only in payroll, benefits and paper pushing.
If all of us are so disgusted, let\’s change it. Somehow. That\’s the other thing I\’m confused about. If everyone likes Ron Paul so much, why doesn\’t he have a chance? He did great in the MSNBC potical matrix, much better than the other choices, if you can call them that. Maybe that\’s more of my idealism coming out, that a political candidate could actually be what they say.
Comment by Tracy -
I have only one thing to say.
\”YOU ARE SO CORRECT MARK!!!!\”
Not only do we need transparency, but we need to have a fair tax system that is checked by logical spending. I am one of those people that currently live check to check and at times a bit over check to check due to medical expenses and other emergencies. So I can agree with you. Our government spends without thinking and at times they spend just to spend.
But in reality no matter who is in the White House does not matter, cause until CONGRESS is brought in line nothing will change. If anyone remembers from high School Government Class, Congress controls the Government Checkbook not the White House. The White House can request money be spent in certain ways, but it is our Congressional Representatives that make that happen or not. They can add and remove spending measures (including Salary increases for themselves – Look at some of the first actions of any congress cycle) at will. Pork or what every you want to call it does not come from the Executive Branch it comes from the Legistative and thus until it is all on the table for the American Public to see it does not matter what is recommended.
Comment by Joel E. Natt -
Really good article Mr. Cuban.
I am a stay at home mother of 4 small children and my husband makes around $42,000 a year. The whole tax system is unconstitutional. Honestly all of your good suggestions are not really addressing the TRUTH of the illegitamacy of the current tax system.
The system is not only BROKEN but is WRONG.
Our family is going to vote for Ron Paul. Please do some research into him, I truly believe you would agree with many of his positions. I would love to see you come on board the REVOLUTION train.
Sincerely,
E.Schulz
Comment by E. Schulz -
I point you to this well-written piece about taxes and the rich:
http://article.nationalreview.com/?q=NmFkNzQyNjU4MjQ4NzQxNzZiOTdjMmVlYmYwYjM2NDA=
My favorite quote being:
\”According to Democrats, its greedy to want to keep your own money, but its justice to demand someone elses. \”
Comment by Joe G -
Amen Mark. We need a change! Check out http://www.fairtax.org. This is the most researched option out there, and one that will accomplish much of what you ask for. I\’m not going to cut and paste all the reasons why, but you will find that it (a) has no tax for those living below the poverty line as they will receive a prebate (as will everyone else) for the necessities (b) it gets rid of the IRS. Since it is so simple, there is not need for this trillion dollar bereaucracy (sp!). and (c) It taxes consumption! So the million dollar trust fund kid who pays zero in taxes becuase investments are not taxed as high will pay as much as you and I for what they consume.
Take this fight to the next level Mark – a blog is nice but lets get some momentum going and make this a vital issue for both sides in 2008!
Comment by Basil -
Mark, thanks for bringing this up! This country could turn itself around in a short time with two major improvements: a flat tax that is vigorously enforced, and transparent, business-like reporting of government spending.
Now get out there and run for office so guys like me can get behind you! We need a successful business man running the world\’s largest business, not a baby-kissing hand-shaker!!
Comment by Tom -
Man some comments on here are dumb. All he\’s saying is find a way to raise taxes on the multimillionaires with millions upon millions in assets so the professionals who basically live off their income don\’t lose a 3rd of it in taxes anymore.
And a sales tax isn\’t the way to do it.
And his donating 4 million dollars to the US treasury sure as hell isn\’t going to lower your taxes one bit. He\’s revealing the elitists\’ dirty little secret:90,000 income a year isn\’t rich. By endlessly taxing that bracket the American elite make sure more people don\’t have enough money to buy assets and actually become rich.
Comment by Art -
Mark, your candor and honesty about this subject is admirable. My level of respect for you has increased ten fold. Thanks for looking out for us on our way to $250,000 per year.
Chubby Average Guy and
Founder of kungtu.com
Comment by kungtu -
Right on the money! Maybe that\’s why you\’re so rich. Awesome job.
After Ron Paul wins, you should be one of his top advisers.
Comment by marcus -
To solve the luxury item tax controversy with respect to its negative impact on American business all you would have to do is legislate mandatory reporting (and subsequent taxation) of luxury items for all US citizens, whether the item was purchased in the US or ANY OTHER COUNTRY. Then we could wait and see how many of the Forbes 400 would renounce their US citizenship to avoid the tax.
Comment by Al Friend -
Mark,
My main man, you have hit the nail on the head! Yes, for those of us who have worked our butts off all our working lives to get to the six figures+ mark are considered middle class in Ca. and not rich!!!! When I pay very high property taxes and can\’t send my kids to a decent public school, that\’s when I get pissed. What a shame!
I could not agree more with all your comments & suggestions. I hope these politicians get it!
Comment by JLW -
Mark Cuban for President!
Mark this is so refreshing and thoughtful. I wish the politicans would listen.
Politics, once a noble calling, has degenerated into slime ball, double speak, demagoguery usually reserved for defense lawyers. Many years ago, while I was in college, I did an internship for U.S. Senator Edmund Muskie, and later was a paid staffer for U.S. Senator Bill Hathaway. Politics was different then. Now it is disgusting.
I wrote a blog entitled Mark Cuban for President! where I explain why you are right and the politicians are wrong. See http://dondodge.typepad.com/the_next_big_thing/2007/12/mark-cuban-for.html
Don Dodge
Comment by Don Dodge -
I feel after looking at the posting, most of the people here just don\’t get it; the point is not that Mark wants to pay more in taxes but that the government is not providing an accurate accounting of what they do with the money. The waste and giveaways are out of control and it will take a clear and focused effort to place a spotlight on the problem, before real changes can be made. The reference to the crack addict is one that I have never heard before but I would have to say is right on point.
There is a mentality in the government that if they dont spend the entire budget they have, they will not receive the same or more the following year. This practice is one that is design to never reward people in government positions to look for ways to save and spend less. We see this practice in all areas, and its a cycle that must be broken.
I personally would rather see Mark and some people with shared views not donate the money to the government but mount a campaign to expose unchecked spending and waste, and lets not forget, accountably for the money received by the government from the tax payers.
Comment by Robert Craddock -
Marks comments are all good and make alot of sense. Even though alot of people would consider Hillary\’s reference of $250k as rich in some circles, for a dual professional income household that salary is within reach of many people. Marks right on about the federal government and their lack of spending control…..why does Buffet\’s suggestion of the rich to pay more taxes come without the notion that maybe the fed\’s already receive enough or too much? When does it end? All the politicians do is talk about the same crap that needs fixed and nothing gets fixed?!?! Healthcare, education, social security…..same old crap and same old problems. What the crap?!?! They ought to be ashamed of themselves in congress actually….they blame it on the current administration, whoever that may be at any given time…..yet some in congress have had a longer opportunity to fix crap and as a whole have netted a zero positive progress! Another thing…..\”save more for retirement\”….what does that mean? The federal pigs put a limit on contribution amounts….even post tax amounts for Roth IRA\’s and Roth 401k\’s…..doesn\’t make sense! I can\’t put $50k a year in a Roth 401k even though its a post tax investment. Tony Soprano had a good gig going…..
Comment by Bryan -
I think the problem with any of these arguments is that they concentrate on income taxes rates.
A person who makes under $30,000 per year spends a large percentage of their income on the other taxes.
1. Sales tax
2. Social Security – this is not typically described as a tax, but it is
3. Medicare
4. Real Estate Tax – this is collected whether you own or rent
5. Tax on gasoline,electricity, phone, water, etc.
If you want to help the average working person, come up with a plan that does not tax any of the basic living items.
The government should stop taxing everything it can.
Comment by John Williams -
Amen, Mark. Your view seems so obvious. Unfortunately our government has created a culture of entitlements, and an electorate that thinks the world owes them something. Congress is intent on representing the selfish interests of their constituents, which are all to often inconsistent with the interests of the nation as a whole. Retirees have been led to believe that they actually paid for the benefits they receive wich are now flat on the backs of working Americans. These workers understand that they are paying for the prior generation even though it is pretty clear they won\’t be so lucky when they reitre. Homeowners that rolled the dice on low up front cost mortgages now argue they were victims of greedy big business ans should be bailed out. Worse yet, many politicians agree with them. yada-yada-yada
Comment by Roger Newman -
Mark,
Thanks for your great article!! I very much appreciated it. I am definitely conversative, but I am also a technology entrepreneur and I can say from my viewpoint that the current tax system is broken. The whole purpose of the federal government was to create an enviroment where everyone is given a fair chance, but right now that is not occuring. I can honestly say from my experiences, that getting access to much needed capital for growing a high technology businesse, no matter how much proven potential they have, is not easy right now. A revamp of the SBA with more loan support would be highly appreciated for helping the \”little guy\” on the bottom who is trying to work up to where you are. Anything you can do to help spread this message would be very appreciated!!! 🙂
Thanks again!!
Comment by Thomas Gatliff -
While I don\’t agree with the fact that you should pay more taxes, I do agree with the transparency. If there were transparency I might be more accepting of the taxes. But, remember that when you buy a Gulfstream that a lot of people have jobs because of your purchase.
Why should taxes be a punishment for success? You created your own. I don\’t think that the rich should be able to exploit loopholes, just pay their fair share.
250k is too low for what Hillary is asking and I think many Americans wouldn\’t mind their taxes so much if they knew the money wasn\’t being wasted by politicians to fill their own and their buddies wallets.
Want to be fair? I say let\’s do the Fair Tax where rebates will be made for the taxes on necessities and you only pay taxes on what you buy and it has to be new.
Comment by Mike -
Dear Mark, I am a 69 y/o man. I have a 10 year old child, a stepson, and 3 grown children. One daughter is a public health nurse, one is getting an MBA in business, and another has a Master\’s in psychology and is a Manager in a regional pool business. I feel they are miracles. I have a 10 year old biological son and an 18 y/o in his first year in college. Life is harder for the last two, but being a father is wonderful.
I worry that my children will not work hard, be disciplined, and will be overwhelmed by the problems that people face these days at my economic level. The worse that can happen is that your kid can have a broken spirit. I have $500,000 in assets and am trying to put away money for college. I worry about college expenses, the duration of my life, health care for my kids, their relationships, college debt, and a job with a decent salary for them. 100,000 million have either poor or no health insurance. College is almost unaffordable. People are losing their homes. Jobs have no benefits(McJob). Families require two people to work. The mortgage, gasolene, rent, food, college expenses, health care bills, are creating black holes for really good kids and hard working families. What do you think they should do and what do you think you should do for them, if anything, and how massive should the effort be? Fraud is rampant in both government and the private sector? Its becoming a crap shoot. How would would you and could you help? How would you motivate people to help themselves? and what about those who cannot help themselves? Do you think this is the kind of world the wealthy want to create? In your heart, do you wish all these people would go away. Thanks. I will wait for your reply. I love my kids, and I respect the work of the wealthy. I don\’t want them wealthy necessarily, I just want them to be happy and be able to pay the bills and create a meaningfull life for themselves.
Comment by David Roberts -
\”I\’m OK with paying either higher taxes at my level of income OR paying a consumption tax on luxury items that cost more than the 250k threshold that Hillary thinks is the level of income that defines rich. But my agreement to pay more taxes comes with a caveat.\”
This is the paragraph that gave me pause when I commented on the 1990 luxury tax. While I understand your example of a 100mm yacht, this statement would seem to suggest somewhere just over 250K would be taxed in excess. Either way, 2-5mm yachts are still right in the thick of the marine industry, 100 million is rarified air and the Forbes 400 probably should pay a luxury tax at that level. If for nothing else but Octopus (Paul Allen\’s yacht) and Rising Sun (Ellison) have to be the most wastefully inefficient and over the top toys for a single family on the face of the planet.
Although, the Maverics are a close second.. I kid, I kid.
Comment by JM -
Mark,
Great article, I think that your idea is really quite brilliant, I am a young entropeneur and I couldn\’t agree more with the barriers that I face in attempting to start my own business. But even beyond tax issues is the other bane of our existance blood sucker… Health Insurance!! How on earth are you supposed to pay for all of the costs of starting a new business when decent potential employees demand health insurance that is going to cost you Thousands per month??
I have a tax and govenrment solution for consideration as well. At the end of your return after you are shown the total amount that you have paid in taxes, you should have to allocate your tax payment… If you feel that iraq is our biggest problem, then spend your taxes on the defense department. If you think that the environment is our largest problem then you can spend your taxes on the EPA.
Good article Mark
Comment by Vince P -
Mr. Cuban\’s comments are quite interesting. His money is his to do as he likes and I\’m sure he would rather keep it than give it to an inefficient inscrutable government (as he says). I can\’t understand those who attribute this to guilt. He was smart enough to earn it so why should he feel guilty about having it.
I agree wholeheartedly about the small business idea. This would cut across the party divide and rejuvenate small town america. We need it bad.
Comment by John K -
Your taxes are lower than your employees. You think this is bad. Why not CUT THEIR TAXES? Raising your own taxes doesn\’t help them, it helps the government piss more money away and makes you feel better. You and Mr. Buffett are @#%$s.
Comment by Matthew -
Very nice article, I am impressed. I have to admit that a few years ago I had a pretty marginal opinion of you as being overly arrogant. However, after seeing a couple episodes of your reality show where you were helping out some unfortunate people and then seeing this post on the front page of MSNBC, I see I was either wrong or you have clearly made some strides in personal development. I hope you keep it up.
I disagree with the posters who (1) dismiss your article as motivated by guilt and/or (2) suggest that somehow the rich are suddenly going to start \”gifting\” their excess money to the government. The first fails to appreciate your proposal on its merits and the second ignores reality. While there are charitable people out there, most people won\’t pony up a dime unless they have to. Taxation must be compulsory.
Another problem that manifests itself in the posts above is that even people making $30k/year secretly believe they\’ll someday be a billionaire, and therefore buy into the myth that progressively taxing the very rich could very well end up hurting them. Some of these people don\’t have health insurance, work two low-paying jobs, yet still vote against their own self-interest. The wealthiest people in our country get (and stay) that way because our society, laws, police, etc. allow them to. The majority of the population has every right to expect those at the top of the wealth scale contribute proportionally to the society that allows them that standard of living.
The biggest obstacle to your proposal is that as long as our elected leaders are beholden to the wealthy special interests that fund each and every candidate, those leaders will always put those special interests. I\’m not sure how you solve that until those most benefitting from the status quo (i.e. Congress) mandates 100% publically-funded campaigns or similar overhaul of the campaign finance laws.
Comment by Alex -
Mark…this is the reason I read your blog. All of the thoughts in this post are things I\’ve complained about for years. I\’m a young entrepreneur and I\’ve considered starting up a company with a good friend, but a few things have kept us from actually making the leap…taxes being one of those.
I too am sick of our politic figures spending out of control. You comparing them to crack addicts is PERFECT! That\’s exactly how our gov operates and I hate to say I feel powerless, but I do. I vote every election, I educate myself about the issues and candidates, but in the end I just don\’t trust any of them.
Comment by justin case -
Mark,
I think you are absolutely correct in all of your points. The problem is that will never happen. There isn\’t a candidate out there that has any possibility of winning who will agree to those terms. The closest one I see is Ron Paul and he has virtually no chance of winning. The government is going to do what they will and to hell with what the people think. Just like the war. Nobody listens, nobody hears that us, the people want change. Too bad they say. Although they did agree change was needed until they were actually elected and then it\’s back to the hell what the people think. I am so discouraged!
Comment by Jan -
Oh my God! I don\’t think I\’ve read anything so \”on the mark\” as Mark Cuban\’e blog. The definition of $250,000 as rich is ridiculous. I know that sounds like a lot of money to a lot of people, and it is. But it doesn\’t make you \”rich\”. It might have in 1955, but in 2007, with the current tax system, you might be left with $175,000 net after taxes. That\’s not rich! Politicians use class warfare to pit the average guy making $50,000 per year against the guy making $250,000. Their strategy is to say that the guy who makes more money is doing so at the expense of the guy who is making less money, as though it\’s a zero sum game. When they convince you of this, then they ask you for your vote so they can correct it through implimentation of taxes and social engineering. There are more votes in the $50,000 range than there are at the higher range. Of course, the big debate is what is the purpose of our tax system in the first place? No matter what the purpose is, the first tenant of any system should be fairness. Most people who make $200,000 or $300,000 or even $500,000 work very hard for their money. They\’re not privleged, nor are they lucky. They just work hard and oftentimes smart, and they shouldn\’t be penalized for their hard work. Most politicians, to include Hillary, have never had a real job in their lives.
Comment by Bob Jacobs -
Interesting post, and it has brought up to me something that i have seen often. Simply that people do not read what is written and read it from the perspective of the writer. They place their own emotions, experiences, beliefs into what is written and thus give the article a completely different meaning than what is intended by the person writing the blog. It\’s a shame that people cannot read the words as intended, and have to then turn around and confuse what has been said and also attack what has been said based on their confusion.
I am amazed that anyone could dispute what is being put forward in this blog. Which essentially, correct me Mark if I am wrong. But is the thory of the wealthy paying a higher tax, the govt reducing it\’s over spending, and those who are struggling to survive to live, the poverty part of America being rewarded with less taxes making their lives a bit easier to live money wise. How can any of you disagree with that? Is it out of a selfish greed for your money that you don\’t want a plan where you would pay a higher tax so those who are struggling and dieing, starving in your country can\’t get by?
Comment by Richard -
Post #63 \”I took home about $48K dollars, with the rest of the profits being re-invested in technology, expansion and hiring. Now – how much income do you think I paid taxes on? Well, as a 49% owner of the business, I paid taxes on about $250K dollars. Or better stated: MY TAXES PAID TO THE US GOVERNMENT EXCEEDED MY TAKE HOME INCOME.\”
It looks to me like you need a tax accountant who can setup your company/business the right way so that you wouldn\’t consider your investment back into the company as profit when you haven\’t set aside the taxes associated with the sales.
And pay yourself a salary. Don\’t scrape the money from the business that the business doesn\’t have.
Comment by Pat Crofoot -
Someone already organized federal spending data into this awesome readable poster. Go buy one or view it online.
http://www.thebudgetgraph.com/site/index.php?main_page=product_info&products_id=1
Comment by aw -
\”And I want 1 more thing. I want transparency.\”
Shouldn\’t we have this already? I want total transparency for all elected officials.
I also want to know how Ollie North was able to collect $180,000 deposited into his bank account by \”throwing loose change into a box under our bed.\”.
But we all have dreams.
Comment by Pat Crofoot -
Mr. Cuban,
As a recent medical school graduate, I appreciate everything you have written here. Physicians are often viewed as being extremely wealthy and living an easy life. From where I stand, this couldn\’t be further from the truth. My wife and I are both recent grads with $500K in debt. While the salaries we will be earning after completing our residencies are very nice, we will not be extremely wealthy.
I find it interesting that people on this blog are chastising you for showing your understanding the situation a typical American faces. I hope that you ignore these people and continue to share your ideas on this blog. Maybe you can buy the Knicks and fix them while you are at it.
Thanks
Comment by Dr. Gallagher -
First off, the receptionist who pays a higher rate than the boss actually pays 12.4% of her income into Social Security. That is theoretically going into a pension fund for her. The fact that the government has and will waste it is a separate issue. So, her tax rate is theoretically lower than Buffet thinks by 12.4%.
Secondly, Mark provided a \”balanced\” post. While invoking \”tax the super-rich\” rhetoric he was careful to raise his threshold far above the more aggressive class-baiters like Hillary, Kerry, Edwards, etc.
Then he bundled his manifest guilt with a call for more government transparency. He made the salient point that if Big Government were a company it would not be transparent enough to trade publicly. Bingo!
Here\’s my question: Why does that call for transparency have to be bundled with soak-the-rich empathy?
It\’s like my son proposing that if he brushes his teeth, then, can he watch television? No. He needs to brush them for reasons independent of peripheral rewards.
The government should clean up its act, get more transparent, and respect taxpayer money INDEPENDENTLY of any changes in the tax system. In other words, drop the bundling argument.
At least one other poster made the argument that Americans simply aren\’t interested in surveilling government spending. I completely disagree. What you have is a Big Media landscape long since claimed by socialists. When was the last time you saw an article about government waste in the paper? Or covered in the nightly news? Here Big Media commits a deliberate sin of omission. They don\’t want Joe Public riled up against Big Government because they want and have gotten an enormous one from which they hope to chisel Utopia. (The only time the media complains about government spending is when \”war\” is involved.)
My problem with Buffet and Mark is that they are aiding and abetting class warfare. There\’s nothing noble about inciting the poor against the rich. They ought to open a history book to see where this slippery slope ends.
Comment by CaptiousNut -
I have an idea to solve some of the issues with the govt and the spending that has spiraled out of control during the Bush Administration…
I support our troops and want them to be well equipped when they are sent into battle…but I am thinking that if we were able to still accomplish the same objectives with one less Fighter Jet we could help a lot of people in the United States…feed people, improve schools, fix our broken health care system, and a number of other issues we face in today\’s world.
Examples of Fighter Jets and the Cost to the American Taxpayers:
F-22 Raptor
Status Active: 91[1]
Planned: 183
Primary user United States Air Force
Unit cost US$137.7 million as of 2007
*** $137.7 Million could help cover the cost of healthcare for a lot of people.
F-18
Primary user United States Navy
Produced 1995-present
Number built 300
Unit cost US$57 million (F/A-18E)
US$59 million (F/A-18F)
$59 Million or $57 Million could help shelter quite a few homeless Americans. I doubt that if we had one plane less, that it would greatly affect the strength of our Military.
F14
Status Active service with Iran, Limited Service in United States Navy
Primary users United States Navy, Islamic Republic of Iran Air Force
Number built 712
Unit cost US$38 million in 1998
*** First Question I have is Grumman selling this plane to Iran if we are concerned about the future with that country and its leaders.
Again $38 million a piece could help improve schools…especially those in the inner city.
Grand Total:
3 Fighter Jets of each Model= $234.7 Million
$234.7 Million could make a difference in alleviating the stress of the Lower and Middle Class.
I agree with you on Taxing the rich the same % as the poor. I feel that this is just another way to help make a difference.
I doubt our Military with 3 fewer jets would suffer as much as those who can\’t pay their medical bills.
Look forward to hearing your thoughts.
Comment by Todd -
I definitely agree with the transparency argument. I think the no tax on small businesses is brilliant. I disagree on the rest, but if we had more transparency, at least we\’d know exactly what we were arguing about. When none of us are even sure what the real numbers are, then it\’s dificult to debate the issues, which I assume is exactly what those in Washington want.
Comment by Tim -
Interesting set of responses. I do admire that you brought up a distinction on sales taxes that many do not when the idea of a \”Flat tax\” is brought up. Even in fiction, I was reading a Tom Clancy novel when the char \”President Jack Ryan\” made a speal about 15% of 1,000,000 income is same as 15% of 10,000 in income. And that the rich pay do pay thier fair share more because they make more. Yet, what most people miss is the distinction between discretionary spending and required spending. The richer you are, the smaller percentage of your income goes to basic necessities. Take yourself, I make 70,000 a year. You probably make over 100* as much as me. Does that mean you spend 100* as much filling up your gas tank to get to work as me every week? Do you spend 100* as much on pescriptions? On Electricity?
The flaw with Flat Tax proponents is they dont account for fixed expenses. If you want a flat tax, it would have to be only on disposible income. Which would mean you would have to calculate first a fixed amount. Something like 0 percent on all income under 50,000. 10% on income from 50-200k. 20% on income from 200k to 1 million. and 30% over 1 million.
That type of \”Flat Progressive Tax\” is the only way to make sure you account for \”luxuries/extras in life\” vs \”Basics\” when it comes to expenditures.
I\’m surprised to see someone as rich as you are though recognize that not all income is the same. My Kudos.
Comment by Michael -
Wouldn\’t companies just start making 39 million dollar jets? Fact is, these taxes don\’t work as the economic forces will work around them.
John
Comment by John -
I meant 10 trillion or 400-500 billion a year interest payment.
Comment by Mac G -
I agree totally with your comments Mark. I do not mind paying taxes as along I think my government is providing me services or is wise in their spending.
When I see 42% our budget go to military spending and while our national debt continues to rise to almost 10 bill, I wonder our priorities.
The tax code was written how many years ago? Forever! It needs to be redone.
The politicians now can not even figure out what to do with the AMT problem looming.
I am a DC resident and we have more right to complain about taxes than anyone. We are all oppressed citizens, who pay taxes but have zero representation in Congress.
Comment by Mac G -
Oooh, I\’ve got a good new tax from 1896. Maybe we could just tax everyone who has a telephone, obvious they\’re rich enough to afford extra payments.
And it\’ll never happen that the middle class, or even poor could end up with telephones, this is a perfectly safe tax only on the rich.
See, because taxing the rich is good, and only the rich own telephones.
But at least the Government chose to take that one away last year. And by \”chose\” I mean \”lost 5 consecutive lawsuits on appeal and was forced to remove it\”.
But hey I\’m sure there\’s no possible issues with other taxes, the AMT listed earlier was just another coincidence. Oddly every tax comes to a coincidence where it smacks the middle and lower class.
But I\’m sure you\’ve thought your plan through. And you have every reason to trust the Government to properly only tax the rich. Sure they\’ve never successfully done this at any time in the past regardless of numerous tries, and every failure has been worse and more spectacular…
But that just means they\’re due for a success, right? That\’s how you invest isn\’t it? When a stock goes down consistently for centuries, its due for a raise, even if they\’ve never made money and never done anything right? That\’s the time to back them?
Or maybe not, I\’m not sure. We\’ll let the really rich guy explain why an organization that has never shown any skill or success at an endeavor should be trusted to succeed this time.
Comment by Gekkobear -
So I can suspect, that unlike Buffet you will be paying your taxes in a regular manner?
You won\’t be spending your resources to set up trust funds, etc. to avoid whatever taxes you can possibly avoid, and will instead simply use the normal payment/deduction methods?
Because Buffet wants a lot of new taxes, and is very cleverly positioned not to pay them should they take effect. Like the estate tax coming back in 2011, which will affect most estates, but trust funds are specifically designed to avoid this tax.
Can we \”trust\” that you won\’t set up such a fund specifically to avoid paying your \”fair share\” of taxes?
Or are you going for the standard hypocrisy in situations like this.
It\’s like watching Bono complain that Britain doesn\’t give enough Government subsidies and charity to Africa, while hiding his earnings in another country to avoid paying income taxes in Britain.
Sorry, but you\’re going to have to do some work to establish your credentials here as someone who actually pays the taxes you should pay, and doesn\’t already do enough jumping through hoops to avoid, not only your current taxes; but the new taxes you\’re proposing.
And if you\’re really just worried about Government revenues, you can simply write them a check. I realize that doesn\’t let you use the force of Government to make everyone else conform to your will, but this is about justice, not power over others right?
So you\’ve got a copy of the cancelled checks you\’ve been writing to make things fair from your view of the situation?
Or are you unwilling to pay taxes unless you\’re forced to?
Comment by Gekkobear -
Transparency – How refreshing that would be!
Comment by Harvey -
Hey Mark
The City of San Jose charged me $975 in BACK FEES inlcuding almost $500 in penatlties for not applying for a business license for a dormant S corporation that had no income for 3 years.
My crime? I deducted my domain and ISP fees from my Federal income tax return, so they deemed me acting as a corporate interest. The State of California required me to pay $800 per year for the privilege of filing the state tax return.
***A busines with ZERO revenue for 3 years cost me about $3500 in govt fees.*** I\’m lucky, I could afford it. I\’m not sure how anyone without money could start a small business these days.
Comment by Rick -
Mark, you and Warren Buffet are magnanimous but the reality is that, from a tax revenue perspective, the non-rich majority is where the money\’s at. As loaded as you and your rich pals are there\’s simply not enough of you or your money around to satisfy the government\’s appetite. Calls for taxing the rich are just politically expedient ways of selling tax hikes that always, always, always wind up nailing everyone. The Alternative Minimun Tax (AMT)– currently crushing millions of middle class folks — was sold as a tax-the-rich scheme. Do the rest of us a favor and stop cheer-leading for Washington\’s latest tax-and-spend scam.
Comment by Andrei -
As an employee with local government (i.e. one of those dreaded bureaucrats), I\’ll share a couple of thoughts.
1) I\’ve worked pretty intensively with federally-funded programs and have come around to the view that there are lots of domestic lines of business the feds should just get out of, period, IF states and local governments would step up and take up the slack. There are probably some exceptions like funding research etc, but all the human services stuff can probably be done much cheaper and better by local or regional governments with adequate funding.
Ideally, the feds\’ role in most domestic policies ought to be to shift enough funds from rich states to poor states that every American has a real chance to succeed in life. (Obviously, fleshing out how this would work is no small project, but presume with me some accountability and standards for these subsidies, with much less fine-toothed interference and compliance-burden than now). In the real world, I\’m not sure how confident I am that all states/localities would handle this well, but even a bad state would probably learn to be much better, and after all there\’s much more political accountability when you\’re closer to the ground.
Common sense is right sometimes, and a bureaucrat in DC is often a very poor judge of what\’s best for rural Oregon or South Dallas. Not to mention the pure idiocy of money that has to pass through the hands of three or four (or five!) different sets of bureaucrats.
2) I think you\’re presuming it\’s straightforward for the federal government to provide a kind of omnibus financial statement. This is not a trivial request, and basically is a good example of the kind of well-intentioned requirement that actually makes government bigger – the US govt is mind-bogglingly complex, and I doubt you could easily get the transparency you\’re after from ONE federal agency without them legitimately having to hire several more accountants to produce a report to your specifications. Multiply that one federal agency by a couple dozen, then ask OMB to hire some more geeks to reconcile these statements, and … well you get the idea.
Finally, I just want to say to the anti-tax wingnuts: when is enough enough? When would you know you\’re paying the just-right amount of taxes?
I\’m appalled at how little leadership there is on an issue this important, and this straightforward. The D\’s really need to push back on taxes, and here\’s roughly how I\’d do it:
a. government does important things that all of us value (understanding we don\’t ALL agree on which things are important, but there\’s more broad and deep consensus than we usually acknowledge).
b. those things cost money. in fact they almost always cost more than they did last year (which that tends to mean government will need more money to do those important things over time)
d. so if you want to cut taxes, one of the important questions is: WHICH important things do you want the government to stop doing? Roads, cops, schools, libraries, parks?
(I know, I know – libertarians think the Magic Market will take care of all of us, which is just this side of thinking Jesus will. If push comes to shove, I\’m going with Jesus over capital, and I\’m not a believer)
And yeah, let\’s stipulate at the outset that government wastes some money, like any large institution, and that corruption and idiocy are rampant, maybe even slightly more than in the private sector.
But again, which important things do you want government to stop doing?
At the local level, this is obviously, the discussion we have every freakin\’ day. And you know what? Where I live, ordinary people (voters) have been pretty broad-minded when the case is made straightforwardly for real needs, and for improvements that respond to those which they can expect to see with higher taxes.
Comment by michael_pdx -
Appreciate your willingness to pay higher taxes to take the burden off the little guy. What do you think of the FairTax? Its somewhat like Forbes\’ flat tax, but it offers a prebate each month to everyone to help them offset the higher costs of food, clothing, etc. Give it a look if you haven\’t already and keep up the thoughtful – if controversial – posts.
Comment by David Mackey -
Mr. Cuban:
Your problem is you can suffer much higher taxation without any decline in your lifestyle than I can, and your lifestyle is considerably nicer than mine, if measured by private airplanes, nice cars, big houses, etc. This is not the state of 99.8% of Americans, which makes your statements quite foolish except as a prescription for yourself.
And even then I can\’t say I support your idea, though it might cut your ego down a little…a good thing, that.
If you feel that you should be giving more to government, just do it. You and Warren and Gates can just cough up a few billion right now. No reason you can\’t, the politicians will accept it. Put your money where you mouth is, sir. any other action is just bluff and stuff. Is that who you really are?
Or just shut up until you have something really useful to say.
Comment by Harry Schell -
although you are right, the rich do not pay their fare share in taxes, there is a much bigger problem with our economy. it seems to me that in 1976 i left my families business at home and went into the workforce starting out at $14 per hour doing autobody repair. today that same job might still pay you $14 an hour, maybe. most of which i believe is controled by insurance companies guilty of price fixing. when you flip that coin over, our taxes, utilities, rent, and insurance has risen many times over that.
my first home was 3 bedrooms, in the country with 5 acres of land and i paid $17,000 for it in 1978. today that same place just sold for $96,000 and with only 2 acres of land. in 1976 a family could live on the mens single income,leaving mom home to tend to the kids. today most families have double incomes and life is still week to week, and the quality of the family unit has deteriorated tremendously.
i personally believe the stock market is an over inflated joke, simply because i dont see any reflection in the streets to pay checks for the increase in business economic improvements. Exxon oil reports $15-20 billion dollar profits per quarter and we still are strapped with $3+ dollar a gallon gasoline ? in 1976 gas was 26 cents a gallon, rent for a 3 bedroom home was $150 a month, insurance for my new car was $186 dollars a year for full coverage, cigarettes was 40 cents a pack, a gallon of milk was around a dollar, i think you catch my drift here !
i live in illinois where the minimum wage is $7.50 an hour and business still prides themselves in offering work for only $7.50 to $10 an hour. rarely will you see a job for $13-$15 an hour. this is simply inexcusable considering the overwhelming increases in the price structure of todays goods and services ! saying nothing to address utility companys, petroleum companys, and insurance companys, who hold more money in investments than anyone today ! big money makes money, but one thing i know is true, i could live very well off the waste in big corporations today, that continue to raise prices to cover their cost increases, instead of tightening their belts and address, waste, pilfering,and corporate upper level salarie waste and corruption.
my question to my government now would be, at this rate of price increases and my paycheck being reduced to pennys in comparison, when can i the consumer and tax payer, be broke ??
i have never made over 28k a yr and today it takes an income of 75k to stabily maintain a family of 4. well im sorry, i guess i will never be able to have the american dream of a wife and family, because i simply cannot afford it ! very sad, i think……………
Comment by dgatorr -
Cuban for President?
Comment by Poko -
All good points but if you really want something to complain about, move to Canada and pay our taxes!!
Comment by Murphy -
Mr. Cuban-
It makes absolutely no sense that he, or I should pay a smaller percentage of our income than those who go to work 8 hours a day
Why didn\’t you pay more last year? The Gov\’t will take it, you know…
Why did Warren donate all that money to the Gates\’ Foundation? Did he \”take\” the \”tax break\” for \”charitable contributions\”? Why?
Apparently. you and Warren want \”others\” to pay more, just not yourselves!
Comment by Scott F Fletcher -
Bravo Mark!
Transparency plus mandates for Federal departments to freeze or cut budgets by selected percentages will bring a more RESPONSIBLE government. Will it every happen? Not until the crack addicts are thrown out of DC . . .
Comment by bob jacoby -
Mark,
Great post and perspectives. I really like some of your ideas and many of your comments. I agree that taxing $250k + individuals would include a lot of hardworking people close to retirement and that it could damage their plans. A+ on the small business tax!
Comment by Jayson -
I often don\’t agree with you Mr. Cuban, but the ideas you are representing here couldn\’t have been expressed better by anyone else… Because almost no one else with the amount of influence you have would say them. People need to stop worrying about if the Democrats or Republicans are the ones failing because the answer is obvious – they both are.
So you are rich? That means you either earned the capital or came upon it by a random way (EX: Lottery, inheritance). Regardless of how you got it the money is yours. All humans are created equal, if we still hold to that ideal than this complaining about the rich getting richer should stop. I am so sick of hearing peers state that the \”rich just keep getting richer and the poor just keep getting poorer!\” I always tell them the remedy for that is to work more. The harder and more uniquely you do your job, the more money you will eventually make. I always tell middle class citizens who complain to think about the poor. The lowest class of the low. They most likely could make the argument that we should be paying more as a higher income than tem. That would sound absurd to you right? Well it is no different middle class working American, than if you were rich. You work, get youre money, do what youre government tells you and shut youre mouth.
Comment by Tyler -
Brilliant idea on the small business tax. The only problem I see is larger companies taking 10-person departments and claiming this status.
Still, it\’s an excellent way to boost the economy. I\’ve gone through it somewhat before and it\’s a PITA.
Comment by Chris -
BTW Mark, I have a bitchin\’ that will revolutionize live sports television. If you\’re interested hit, me back at my email for the details.
Peace.
Comment by Jon -
…and you didn\’t even bring up Social Security. Due to the contribution cap I pay around 6% of my income into that, while you pay probably somewhere around 0.00000000000006% of yours.
So you and Warren are on board, what about the other 398?
Comment by Jon -
Great post Mr. Cuban. It is refreshing to hear people in your economic class discuss the inequities in our tax policy. However, I think you are being a little naive in your view of federal government spending. It\’s a lot harder to cut spending than you think it is… fat pork discretionary spending projects (ie the \”bridge to nowhere in alaska\”) make up a tiny tiny tiny portion of federal spending… the vast majority of the federal budget is for important or mandatory programs that can\’t be cut…
\”Just seven programs make up about 75 percent of all federal spending: Social Security, Medicare, Medicaid, military pensions, civil service pensions, defense and interest on the debt.
That\’s \”big government.\” Republicans aren\’t trying to cut a dime of it. In fact, they\’re calling for big increases in every one of these programs. According to the White House, interest on the national debt alone will soar by 66 percent over the next five years thanks to the red ink oozing from President Bush\’s budget.
And those \”big 7\” programs come before you toss in everything from NASA to the national parks to the National Institutes of Health, not to mention homeland security, student loans and farm subsidies – all things Republicans support, and which take up a goodly portion of the quarter on the federal dollar that\’s left.\”
http://www.mattmilleronline.com/articles.php?id=34
Comment by Mike -
Don\’t raise MY taxes because YOU feel guilty, Mark, What percentage of your gross income have YOU donated to NONPOLITICAL charitable causes? If YOU want to pay more, YOU pay more.
You greedy, self-centered fraud, my money- that I\’ve worked hard for- is MINE, not yours to give away to the government or for your cause-du-jour.
The Carnegies and the Mellons built libraries and museums- what have YOU built, Mark? Where\’s YOUR buildings, open to the public, for the betterment of the public? The Du Ponts built hospitals… where\’s yours?
Poseur. It\’s awful easy to be generous with other people\’s money, isn\’t it Mark?
Comment by DaveP. -
I sell a home furnishing product to interior designers. One of my client\’s client IS a Forbes 400 billionaire. Redoing one of their houses, they went out on their own and bought a bunch of furniture from a name brand company telling the designer they got a 40% discount. Turns out they were using her name to get the designer discount. Don\’t tell me billionaires don\’t count their money……..and wouldn\’t avoid a 10% tax on luxury items.
Comment by Will -
Mark,
I would appreciate if you would share advice about how to invest/prepare for US dollar decline and the seemingly inevitable US economic crisis on the horizon. thanks.
Comment by DARRYL -
Fine…if you want to pay higher taxes go right ahead. There is absolutely NOTHING to stop you from writing a larger check to the government the next time you pay taxes. But I\’m sure your rich-liberal hypocrisy will rear its ugly head and you will have your accountants find and exploit every legal means available to keep your taxes as low as possible.
Comment by Fig Jam -
I have a better idea, Mark. Instead of ruining the economy with higher taxes, why don’t you just break open your tight purse strings and donate a few bucks to The Salvation Army. They do more good for the poor and unfortunate in our society with a dollar than the government does with a hundred dollars.
From MC:
You didnt read the entire post did you ? Or do you just have a hard time understanding what i wrote ?
Just curious
Comment by KC -
You wanna pay more? Go ahead. Nobody is stopping you. As for me, unlike
you, I am not wealthy enough to become a socialist so as to prevent others
from achieving wealth.
Comment by Gary -
Nice blog, jackass. That\’s the problem with you and your 399 other
rich pals, you\’re woefully out of touch with the rest of us \”working
stiffs\”. Just because you got lucky speculating over the internet
boom doesn\’t mean you are a tax expert. What say, you just worry
about dancing with the stars and programming ultimate fighting on
your tv station until you\’re actually ready to put your money where
your mouth is.
Comment by kurt himmler -
Congratulations Mark: You just lost me as a fan and supporter! What a crock of crap! How much do you spend every year to shelter your low tax rate? How much did you spend on the Lobby/Dole!
Last post, deleting your blog
Comment by Mary -
Agreed Mark. Good thoughts. Thanks for sharing them.
Comment by Marty -
Mark,
\”The 60 year old executive who is already scared shitless that their job could be eliminated tomorrow and that they have not saved enough for retirement.\”
I\’m sorry, but if you are 60 and have a $100k+ salary and don\’t have anything saved for retirement, thats your problem.
My aunt worked at a bank for 27 years and retired while making $36,000 CDN a year at the age of 62. If she can manage to save up enough to do this, you can do it with a $100k a year salary.
If you don\’t consider people that make $100k a year rich, you need to reevaluate your views on rich and poor people.
If you have any job openings at HDnet for $60+k a year, let me know, I would be more than willing to work my ass off for it, I already work my ass off for much less!
That said, I agree that the taxation system is screwed in both the US and Canada.
Comment by Kray -
Mark,
Great post. I never thought much about this issue in this light. It isn\’t fair for those who can\’t afford basic neccesities 8% when that 8% could be a large chunk of their money.
I would love to hear your thoughts on the gift tax.
Comment by Stephanie -
Unfortunately Mark, there aren\’t enough super rich people to make a dent. And let\’s say we get into this luxury tax thing… It\’s not just super rich people who buy yachts or Lexus hybrids. A lot of people stretch themselves to be able to afford nice things. And while you may be willing to pay an extra tax on such items, imagine being the yacht broker or builder. Do you think such a tax would be good for their business? They are probably hard working middle class people hoping to build and sell lots of yachts.
And another thing… Already, the top 20% of earners account for more than 50% of federal tax receipts. Do we want a society where most people don\’t pay taxes and still vote? I say no. I think the fairest system is a flat rate tax that treats income and capital gains the same, with a rebate or negative tax for earners below some level. And that level isn\’t driving a Lexus or watching HDNet on a 40\” Sony.
Comment by Brad Hutchings -
Mark- Please look at the effects of the 10% luxury tax from 1990-1992 as mentioned in other comments. The yacht industry, which is not to be confused with yacht owners, is run by a middle class sales force and skilled craftsman. The Luxury tax destroyed the lives of thousands of people for a decade. And contrary to what others here have said, boaters did not just buy them overseas, they simply did not buy yachts at all. That threashold for a new wealth tax would have to be on yachts $10-million and higher to not seriously damage the industry again. Keep up the good work.
Comment by JM -
If Warren thinks he doesn\’t pay enough taxes; why did he give 1 billion to his buddy Bill Gates foundation and then take the tax write off? Why not just donate the money and not take the tax break if you think you\’re not paying enough taxes? Warren could have helped two of his favorite charities at the same time! Not to mention it seems hypocritical to be looking for tax breaks and then say you\’re not paying enough in taxes!
Comment by Matt -
\”If Warren wants to buy or build a yacht for a hundred million dollars. Nail him with a 10pct federal tax surcharge. If I want to buy a Gulfstream Jet for 40mm dollars. Nail me with a 10pct federal surcharge above and beyond current taxes\”
Let me add to what others have already said. This was tried in the 80s and was an unmitigated disaster!!
Thousands of blue collar works in the boating and aviation industries were thrown out of work. Companies with decades of profitable operation were forced out of business after sales dried up.
The rich were not \’punished\’ at all, it was the blue collar craftsmen who received a body blow from which many never recovered.
Our tax code needs a lot of work, if not total replacement with something better.
But singling out single products for punishment hurts \”workers\” the most.
Here\’s a suggestion: Why don\’t you raise prices on your products 10% and donate that money to the goverment? You are in the \’luxury\’ business, nobody really needs entertainment media.
Come back in a couple of years and tell us how your \’luxury\’ tax worked out for you.
Comment by Jim Howard -
robert kiyosaki must be angry reading this post
Comment by Sam -
The debate gets focused around *income* tax. The rich like this because they have the bulk of investment income, which is not only taxed at lower rates but is not subject to medicare or social security taxes.
So, if you are lucky enough to inherit a million or so, you can live nicely on dividends and pay very little in taxes.
Comment by Eric -
Mark,
I just want to thank you for being honest and real on this. Not everyday you hear a person with wealth talking so openly about how they know they are taxed at a lower percentage, knowing they can afford to pay the tax bill of 1,000 people who are on welfare.
I would like to know your opinion on something that has been bothering me and no one seems to catch onto this. The issue is freezing rates on sub-prime loans. In the current market, the future rates are projected to drop from the Fed several times in order to restart the economy, given the history of the Fed over the past 30 years. Yet we hear people like Bush and H Clinton talking about Freezing the rates at their current level, to help these people from having their homes foreclosed on. If that was the true goal, I would applaud them. However, since the rates are going down, these ARM loans should also be dropping, and the sub prime loan amount would also be dropping.
So instead of talking about a freeze, which only would help the banks maintain the current high rate, making them Billions over the life of the loan, they should be talking about setting an upward limit, yet allowing these loans to decrease as the Federal Rate decreases. WE DO NOT NEED A FREEZE!!!! These plans are not intended to help the consumers, these plans are only intended to help the banks maximize their profits in order to overcome the recent losses at the expense of people getting what they truly should; reduced payments according to their signed contracts.
So do you agree with my little rant?
Thanks again for being open and honest.
Comment by Kevin Kleinsmith -
Mark Cuban for President!
Comment by Michael Martin -
Nice blog, jackass. That\’s the problem with you and your 399 other rich pals, you\’re woefully out of touch with the rest of us \”working stiffs\”. Just because you got lucky speculating over the internet boom doesn\’t mean you are a tax expert. What say, you just worry about dancing with the stars and programming ultimate fighting on your tv station until you\’re actually ready to put your money where your mouth is.
Comment by bill blake -
I get a kick out of you rich guys so thoughtfully telling us how much more you would like to be taxed.
If Warren Buffett wants a death tax he should just will all of his money to the federal government. If you are frustrated with how the federal government is spending your money then set aside all of the money you would otherwise have extorted from you in our tax system and spend it effectively with charities as you see fit.
This is what freedom is all about…freedom to make choices about how you spend your money but please don\’t saddle the rest of us with your stupid ideas.
Comment by alex johnson -
Well said.
I like your small business idea so much, I am printing this out to give to my boss. She doesn\’t read your blog, but she employs fewer than 25 people, and the burden on her is outrageous. Part of my job is to cut the checks for those payments; they are myriad, and they do add up.
Comment by Susan Lewis -
Mark – all of your ideas sound good, but the problem is that anytime you tax or don\’t tax specific groups of people, someone else (usually the little guy) has to pick up the bill. If you tax luxury items and two less jetstreams are sold, who gets hurt? It\’s not the owner of Boeing, it\’s the 3 mechanics he had to fire. You can apply this same principle to almost every one of your other ideas. The bottom line is that we need a fair and simple tax system that is applied equally to all people, no matter how rich (or poor) they are. Whether it\’s the Fair Tax or a straight flat tax, the most important features are equality and simplicity.
Comment by Marcus -
i agree.
give me your money,.
Comment by eastwood -
The real question for me, is what can I do to create change? There seems to be no one that represents what you are talking about.
Comment by brandon goldman -
It\’s the thought that counts right Mark. :}
Comment by Vicky -
Hey Mark, It all sounds good but people vote with the pocket.Mr Warren, with all due respect knows how to talk and when to say it. Hes a genius no doubt but like any other guy with a lot of money or even a little could care less about who dies in wars or what happens to the little guy. That was proven in the last election. Anyone who believes different is either naive or totally stupid. Its a nice fantasy though. Thanks for the thoughts
Comment by Frankie from Lawnside -
Poster #11 is confused Ron Paul\’s platform. There will still be taxes, just not the income tax. Also he doesn\’t want to use the \”inflation tax\” because he wants to return to the gold standard which will prevent the government from being able to print money at will to pay for programs for which they could not justify taxes.
Mark, I\’m curious what your thoughts are about Ron Paul. You say that you would like the size of the government to shrink and it seems that Ron Paul is the only candidate who would try to shrink the government.
Comment by Bruce -
Note to the advocates of the \”simpler\” flat tax— the complexity in the tax code is NOT in the tax rates or bands, rather it is in the DEFINITION of INCOME. Many advocates of the flat tax end up with a system that only taxes wages and salaries, thereby exempting from taxation anyone who can restructure their income to avoid \”salaries\”.
The 25-employee businesses that would pay no taxes…. they could be paper artifices — 100 of them would cover a rather large enterprise of 2500 employees — never underestimate the creativity of legal minds when weaseling out of a tax is concerned!
Comment by Bill -
Mark,
It would be interesting to have your opinion and break down for the Presidential hopefuls. I would like to hear an opinion from an obviously successful business man, which is an aspect that we all seem to agree upon. You could comment on which candidates have a plan to help increase the value of the dollar and help better run our country from an economical aspect.
Comment by Jake -
I agree with Cuban\’s points completely. I also share his pessimism. I don\’t see any candidate apt to make this situation really right.
I don\’t understand why there isn\’t a tax bracket somewhere around the point where 6% spins off average income. In Raleigh the average household makes somewhere around $80K/year. So once one makes more than $1.3M or so, they could passively be average. If we are going to have a tiered system, why not make this \”rich\” level somewhere around 1.4M or so? $250,000 is WAY too low.
People who actually PAY taxes feel far more invested in this country than those who don\’t. Given that 50% of wage earners don\’t actually pay any income tax, it\’s no wonder why voter turnout is so low. Raising taxes ever so slightly on that 20th to 50th percentile, just to get their attention, would do wonders for this country as well.
Comment by Dana -
Mark,
I think the ideas you present in this post are spot on. I especailly like the idea of having an Income Statement/ Balance Sheet for our government, as well as no taxes for small businesses. Brilliant. Best blog post I have read in weeks. Thanks for this.
-Brent
Comment by Brent -
There\’s a fix for this problem, and Warren Buffett has nailed it: the introduction of a progressive consumption tax. As I\’m sure a few of you have heard, such a plan is now undergoing public debate – it\’s called the FairTax Act of 2007 (HR 25 / S 1025): http://snipr.com/irsgone
Though the legislation has been re-introduced in every session of Congress since 1999 – and has increased its co-sponsorship in every Congress (72 presently), its become a big part of the presidential race, with Mike Gravel on the left ( http://snipr.com/gravelpart2 ) and Mike Huckabee on the right ( http://snipr.com/fthuckabeeonirs ).
But is FairTax FAIRER? To provide substantive answers, Prof.\’s Kotlikoff and Rapson (10/06) have concluded ( from http://snipurl.com/kotcomparetaxrates ),
\”…the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.
\”Consider, as an example, a single household age 30 earning $50,000. The households average tax rate under the current system is 21.1 percent. Its 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax.\”
Further, per Jokischa and Kotlikoff (2005 http://snipurl.com/kotftmacromicro ),
\”…once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there\’s a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent.\”
As things stand at present, Americans labor under nothing less than \”tax slavery,\” having our wages confiscated every working hour, as reflected in our paychecks every two weeks.
Thus, from the above, we can see that citizens will never pay the full FairTax rate (23 cents from every retail dollar spent). For example, if the median household income for 2006 was $48,201, and the average household size is comprised of 3 persons. We\’ll average the prebate between $329 (single adult, 2 children) and $458 (married couple, 1 child), or $393.50/mo ( http://snipurl.com/ftcalc ). If this family spent their entire $48,201, 23% FairTax ($48,201×23%) would equal $11,086. However, the prebate returns $3,948 reducing the tax paid to $7,138, or 14.8%.
The current income-based tax system is also more expensive to run, because of the manner in which the tax code is gamed by politicians and lobbyists. Politicians realize great power, and attract constituencies for support, by granting tax favors (i.e., credits, deductions, exemptions) through lobbyists. Fully, fifty-three percent (that\’s 53%!) of Washington lobbyists are there because of the tax code! The tax code is continually changing, making it more complex and more difficult to understand. And, the salaries and costs of tax lawyers and lobbyists end up in the prices of the products and services we buy. Additionally, the time and money required to keep records, file returns, report for audits, retain accounting and legal help, pay IRS penalties and interest, is time and money lost for other productive, or recreational, activities. Depriving us of the use of withheld wages increases our expenses through zero-interest withholding, inflation, return preparation time, and interest paid on credit cards and loans that otherwise may not have been necessary. Summed up, the cost of tax compliance, nationally, has been estimated to range anywhere from $265 billion to twice that amount, depending on the extent to which tax-avoidance consultation is sought and utilized. These expenses constitute a substantial \”hidden tax\” which is incomprehensible to the average working American. And the FairTax gets rid of all of it for most Americans, and most of it for business owners.
It is our belief that government should serve We, the People, with a fair tax system that will not enable politicians to pit poor against rich (creating barriers to achieve wealth, adding tax penalty to the sacrifices made for personal success). Nor do we want politicians to continue using business as a tool to hide taxes from consumers, often villifying business, which discourages entrepreneuship, personal achievement, economic growth. Liberty and happiness depends on restoring the fruits of labor to those who produce them. We believe that the tax function should align with economic growth, not against it, that government should be paid for in the same manner as working Americans – when, and because, something is sold.
Many of us have joined FairTax.org ( http://snipr.com/becomeamember ) in order to build a national movement to free ourselves, our family pocketbooks, and our businesses from confiscation of income, and punishment of productivity. And this we say to our federal representatives, \”Either scrap the code ( http://snipr.com/scrapthecode ) and enact the FairTax, or we intend on replacing you with someone who will.\”
Comment by Ian -
Super rich guilty syndrome is what Warren and Mark suffer from.
The rich people in America, the top 10%, already pay 65% of all income taxes. I write about this here, http://www.eclecticismo.com/hhblog/2007/01/some-facts-that-are-painful-to.html, on my blog.
The real problem in America is that we continue to elect politicians who continue to spend more money than the government receives in revenue.
It is that simple. You could take away all the money Mark, Warren and Billy G. have accumulated and without real fiduciary reform our government would be still be asking for more money from the tax payers.
So go ahead, make fun of the simple answer. But forty years of debt based government economics ain’t going to make a lie the truth.
I’ll see you in the soup line in 15-20 years.
From MCL
did you even read the entire post ?. The only way Im will to agree to more taxes is in exchange for transparency AND reductions in spending
Comment by Herschel -
Ummm… why do I hate uber rich people who feel the burning need to tell me they feel my pain.
PISS OFF! If it makes you feel so fuckin\’ bad give it back.
Now I\’m off to see what small African country Bill and Melinda are saving.
Comment by mliving -
I have been thinking about transparency and our tax dollars for some time! This could be especially helpful with local governments who have the ability to waste also. They just do it on a smaller scale.
Warren Buffett is right. The fact that a few Rush Limbaugh listening teachers at my school disagree with him is all the proof I need that he\’s right.
Comment by david freer -
Mark,
Your frustrations with the tax code are well placed as is your assertion that the federal gov\’t needs to curb spending. Looking at the current presidential candidates, its not going to happen this election cycle. If the rep wins, our tax dollars go to the war on terror. If a dem wins, our tax dollars go toward some sort of universal health care (I\’ll admit that I haven\’t paid attention to their plans mostly because bigger gov\’t is the last thing I want). Either way, freedom loving people lose.
I also agree with the transparency of spending being lacking. Here are some \”good\” gov\’t resources:
http://www.whitehouse.gov/omb/budget/fy2008/budget.html
http://www.fms.treas.gov/fr/index.html
If you click around, you can find a balance sheet from this past year (where it claims we spent less than the previous year – something doesn\’t seem right with that information). If any accountants want to help me sort through the data, I would love to display the info in graph form online (I\’m a web programmer).
You might also check out:
http://www.thebudgetgraph.com/
2008 budget has 717 billion in military spending and 358 billion on non-military. The numbers are just mind blowing!
Oh, and it only took 11 comments to mention Ron Paul…I love the guy and he\’s getting my vote in the primary but unless something major happens, 75% of people will still not have heard of him.
Comment by Scott S -
If you feel you or Warren\’s tax is too low, there is nothing stopping you from throwing in a little extra. Or is it only OK with you when it is made compulsory?
Gifts to the United States Government
How do I make a contribution to the U.S. government and how can I return my tax relief payment to the Treasury?
Citizens who wish to make a general donation to the U.S. government may send contributions to a specific account called \”Gifts to the United States.\” This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States. Money deposited into this account is for general use by the federal government and can be available for budget needs. These contributions are considered an unconditional gift to the government. Financial gifts can be made by check or money order payable to the United States Treasury and mailed to the address below.
Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 6D17
Hyattsville, MD 20782
Any tax-related questions regarding these contributions should be directed to the Internal Revenue ServiceExit the FMS Web site at (800) 829-1040.
Comment by Jerry -
Small business is very hard, Ireland has grants that RETURN 50% of expenses for startups. I visited with my accountant today and its the most confusing mess of loop holes anyone could dream up. You speak like a true businessman, great article!
Comment by Allan Branch -
Here\’s a concept… how about NO taxes? Reel in government spending and let inflation take the place of taxes. Ron Paul is our best prospect regarding tax laws, say goodbye to the IRS.
http://www.RonPaul2008.com
Comment by Eddie -
Mark,
I\’ve been wishing myself for a presidential candidate who \”respects the value of a dollar\”. I\’m not a political guru, but from what I\’ve seen and heard, there is only one candidate who has even mentioned the value of the dollar–that\’s Ron Paul. He claims the \”drug addict spending\” you mentioned is driving the value of the dollar way down and setting us up for some serious inflation. His proposed solution is to downsize the government in a big way–I tend to agree.
Comment by Ben -
How about making departments of the Federal Government responsible for funding themselves? The only condition being all departments must re-invest in US companies and manpower.
No outsourcing.
Then take all income tax revenue and use to settle debts with other countries until all balances are zeroed out.
Once that is complete, use all revenue to fund national health care.
Government must make a pledge not to spend one more dollar that is brought in.
d
Comment by dan -
You could not be more right Mark. As the owner of several businesses all I can say is that it is an absolute tragedy how burdensome it is to start a business. If the government made it easier I would gladly give it half the fees I normally pay to accountants, lawyers and consultants.That would be a win-win situation. And I would gladly pay a consumption tax when I am able to afford that Gulfstream. The politicians should encourage business, not weigh it down. This would benefit everyone.
Tom
Comment by Tom B -
Putting an extra tax on luxury items will not work. In fact, it was tried before. So the uber-rich shifted their purchases like yaghts from US facilities to overseas facilities where they would not have to pay the tax. As a result, US luxury businesses folded and many talented people lost their jobs.
So a luxury tax would ultimately hurt a lot of \”little guys\” but not impact the rich, or raise the sums, as expected.
Haste to say it but a higher tax rate not only for income but also dividends/capitol gains would be what is required.
Comment by Elizabeth -
Couple quick suggestions:
How about a simple flat tax that kicks in say, if you make more than $50K per year. Every child gets you and additional $10K exemption.
If you are poor, you are not taxed at all. The middle and upper classes bear the tax burden.
You wanna create jobs? Let\’s make corporate income tax zero. Who pays corporate income tax —- hint: it is not corporations.
It is either capital, labor or shareholders. The first and the third are significantly more mobile than labor. Make corporate income tax zero, watch real wages increase and jobs be created.
Comment by Varangy -
What the US (and other) tax system doesn\’t need is more taxes, more tax bands or more rules. It needs a simplification. An Economist article last year estimated tax collection to cost between 10-20% of tax revenue due to tax complexity.
Make tax a simpler deal: fewer taxes and tax bands, few to no exemption or \”special rules\” to specific industries or interest groups.
That way you could lower the headline tax rates for everyone and still raise the same or a higher amount in effective tax revenue (and make your tax return on a post card).
The tax system has been tinkered with to death, but politicians defying interest groups and lobbyists by removing special rules might be too much to ask for..
Comment by Wille -
Couple of points.
Marginal taxes on high earners – the equivalent of today\’s $250K earners – were enormous back in the 50s/60s (at one point close to 90%). What Clinton is proposing would put us around Reagan-era taxes, and experience tells us it was not a huge hit. I\’m not saying that means she\’s right, but your criticism could use a bit of historical perspective.
As far as cutting spending: OK, so what would you cut? I don\’t buy the \”no transparency\” argument; I think it\’s a matter of no interest on the part of the public. Everybody wants to cut spending, until it\’s the project that helps their state, or the services that they use, or the student loan program, or whatever. A lot of people spend a lot of time digging through those federal documents and reporting back to the public – the public mostly ignores it and watches a pundit on Fox rail against one particular item. We have one of the most transparent governments in human history, and a public that\’s not interested in the details, and that\’s a more fundamental problem than can bd solved by better forms and reports.
(Jeez, that sounded cynical.)
But you\’re right – the whole thing could certainly be simplified. What worries me is stuff like Huckabee\’s lame-brained \”fair tax\” (which basically is very regressive and screws the middle class) which is simpler… but otherwise a disaster.
We have a pretty good deal tax-wise in this country, but let\’s face it, nobody ever went wrong running for office complaining about taxes.
Comment by John Whiteside -
Just because you can afford the tax doesn\’t mean you\’ll want to pay it. You\’ll find ways around it. Instead of buying new, you\’ll buy used. Even if you persist in buying new, others won\’t be so \”charitable\” with their hard-earned money. After all, it isn\’t honorable or admirable to pay taxes that could easily be avoided.
And guess what, the industry that produces these new \”luxury\” products will get hit. Or should I say, their employees (who are not rich by any stretch of the definition) will get hit. They\’ll lose their jobs.
Couldn\’t happen? It already did in the \”luxury\” yacht industry.
Gotta be careful about those unintended consequences…
Comment by Brent Logan -
Mark,
If due to some perceived guilt you are so gung-ho in raising taxes on the uber-wealthy such as yourself and Warren Buffet — here is a suggestion for you: Why not simply donate whatever excess you want — say $4 million (10% of your $40 million Gulfstream purchase) to, not a charity, but rather the government.
What is stopping you?
Comment by Varangy -
You say \”Will i avoid the Gulfstream or Warren the Yacht because of the surcharge?\” History says that you will avoid buying it in the US. Just such a tax was placed on yachts in 1990, and the net result was that the yacht-building industry in the US was almost destroyed. People just bought them overseas instead, or didn\’t buy them. So the tax was repealed in 1992, and it took years for the industry to recover.
Having said that, I would have zero problems if we were to switch to a flat tax, where you\’d pay the same percentage of your income as I would. But that will never happen in this country – politicians like to do social engineering with tax laws too much.
Comment by Skip -