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WSJ Op-Ed: A Short History of the Income Tax

By the always-worth-reading John Steele Gordon (author of the excellent "Empire of Wealth: The Epic History of American Economic Power")
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A Short History of the Income Tax
One original sin was the separation of the corporate and personal tax, giving lawyers, accountants and the wealthy a chance to game the system.
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The other pernicious consequence of the separate corporate and personal income taxes has been a field day for demagogues and the misguided to claim that the rich are not paying their "fair share." Warren Buffett recently claimed that he had paid only $6.9 million in taxes last year. But Berkshire Hathaway, of which Mr. Buffett owns 30%, paid $5.6 billion in corporate income taxes. Were Berkshire Hathaway a Subchapter S corporation and exempt from corporate income taxes, Mr. Buffet's personal tax bill would have been 231 times higher, at $1.6 billion.
Worth keeping in mind that part of the reason we have high marginal tax rates is because we keep narrowing the tax base by adding all kinds of exemptions, deductions, credits and other shenanigans - and that applies to both the personal as well as the corporate tax systems, but it's especially convoluted on the corporate side (ie the headlines about how GE didn't pay any income taxes in 2010).
Anyway, just food for thought. And regardless of all of this, I can't recommend highly enough JSG's book "Empire of Wealth". I read it about 4 years ago and may dig it up and re-read it.
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David S. Meyers, CFP(R)
http://www.MeyersMoney.com
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Reply to
David S Meyers CFP
A really good article which applies the same principles to the specific US and UK bash-the-entrepreneur tax proposals is in The Economist
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They say kill the deductions rather than raise the rate, to preserve incentives for growth. Killing spending too much can harm growth also.
P.S. an ex hedge fund guy has set up
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with umpteen short videos to boil down the essence of various concepts in a few minutes. Covers banking, credit, economics, credit, currency and almost everything. Supposedly sanity checked with his Harvard network of experts, and aimed at bringing Ivy League understanding to an attention deprived high school level of comprehension.
Reply to
dumbstruck
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Daniel01
Reply to
Daniel01

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