Mark Cuban for President!

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.

The politicians of both major parties should listen to Mark Cuban.  Mark is talking sensibly about business and tax policy. Please read his blog post (linked above) to get the full picture. Mark has done a masterful job of explaining why taxes should be higher on the super rich, and why $250K per year should not be considered rich.

Warren Buffett has been in the news a lot lately saying that he, and most wealthy people, pay a lower percentage of income in taxes than their secretaries do. That is because Buffett gets most of his income through capital gains which is taxed at only 15%, while most people get most of their income from a W-2 salary which is taxed at much higher rates. Everyone pays a social security tax, known as FICA, of 6.2%, but it caps out at $90K of income. Everything over that is free from FICA tax. Sales tax is another regressive tax ...proportionately it effects lower income people more than rich people.

Mark Cuban actually makes sense of all of this by making several proposals.

Consumption tax on luxury items - "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."

$250K per year is not rich - "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."

Cut taxes on small business - "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."

Mark Cuban has it right. The politicians are wrong. They want to make this a class warfare issue pitting the low income people against the high income people. Mark says raise taxes on the truly super rich, not the "high income" people who work hard every day for $100K to $250K.

Mark's idea for not taxing small business (up to 25 employees) would do more for real job growth and economic growth than anything the politicians from either party could dream up.

Give the death tax the death penalty. I have never understood the logic or fairness of the estate tax, which is really a death tax. How is it fair for an entrepreneur to work really hard to build their business, pay very high taxes on their income every year, then pay even more capital gain taxes on their investment income, then pay another 55% in estate taxes on top of all that when they die? How is that fair? Many entrepreneurs have to sell their businesses because their children can't afford to pay the estate taxes. The politicians always trot out the "family farm" example, but the far more common example is the thousands of small businesses of every description that must be sold every year to pay estate taxes.

These issues are too complicated for politicians to understand, and they don't fit into pithy 20 second sound bites...so they never get addressed. Instead we are treated to pontifications on immigration, national defense, and education. And nothing changes.

Mark Cuban, please run for president!

OK, now that is off my chest...I will return to topics I love like technology and business.

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Comments

[Ben Fulton]

Mark Cuban has got it right, but you're way off base :) Estate taxes don't even kick in until the estate is over $2MM ($4MM for couples) I don't think you can claim that people with that much money aren't rich. Moreover, using the term "death tax" is engaging in precisely the same demagoguery you profess to oppose at the beginning of your article.

[Don Dodge]

OK Mr. Fulton. Do you care to explain to me how taking 55% of everything an entrepreneur has earned, over $4M, is fair or logical?

Forcing their children to sell the business because they can't afford the estate taxes is fair?

Is it fair because it doesn't apply to "low income" people, and only applies to those who are rich by their definition? It is OK to warp the logic based on income level?

Please explain that to me.

[Ian]

You've got a presidential candidate who one-ups Mark Cuban while espousing a tax plan that meets Warren Buffett's call for a progressive consumption tax (see 3:30 into this video: http://snipr.com/buffett330 ).

Mike Huckabee is ONE ( http://snipr.com/fthuckabeeonirs ) with the FairTax grassroots movement ( http://snipr.com/becomeamember ). While many - like Romney, and others, who are invested in the current income tax system - seek to demagog ( http://snipurl.com/taxpanelrebutted ) the well-researched FairTax plan, its acceptance in the professional / academic community ( http://snipurl.com/econsopenletter ) continues to grow. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown ( http://snipurl.com/meltdowninprogress ) because of the hidden aspects of the current system that make political accountability impossible.

Romney's recent WEAK response to FairTax questioning on “This Week with Geo. Stephanopoulos ( http://snipurl.com/stephanopoulosdebate )” drew a sharp contrast between Huckabee and all other presidential front-runners who will not embrace it. Huckabee understands that what's wrong with the income tax can't be fixed with "a tap of the hammer, nor a twist of the screwdriver." That his opponents cling to the destructive Tax Code, the IRS, preserving political power of granting tax favors at continued cost to - and misery of - American families, invigorates his campaign's raison d'etre.

Of the FairTax, Huckabee asserts that it's...

• SIMPLE, easy to understand
• EFFICIENT, inexpensive to comply with and doesn't cause less-than-optimal business decisions for tax minimization purposes
• FAIR, FLAT, and FAMILY FRIENDLY, loophole-free, and everyone pays their share
• LOW TAX RATE is achieved by broad base with no exclusions
• PREDICTABLE, doesn't change, so financial planning is possible
• UNINTRUSIVE, doesn't intrude into our personal affairs or limit our liberty
• VISIBLE, not hidden from the public in tax-inflated prices or otherwise
• PRODUCTIVE, rewards - rather than penalizes - work and productivity

A detailed benefits analysis of the plan (from The FairTax Book) explains Huckabee's ardent advocacy:

For INDIVIDUALS:
• No more tax on income - make as much as you wish
• You receive your full paycheck - no more deductions
• You pay the tax when you buy "at retail" - not "used"
• No more double taxation (e.g. like on current Capital Gains)
• Reduction of "pre-FairTaxed" retail prices (due to reduced costs, increased competition)
• 29.9% mark-up yields 23% FairTax portion of prices
• Over the first year, "market-adjusted" FairTax prices comparable to current
• Every household receives a monthly check, or "prebate"
• "Prebate" is "advance tax payback" on poverty-level consumption
• FairTax's "prebate" ensures progressivity, poverty protection
• Finally, citizens are knowledgeable of what their tax IS
• Elimination of "parasitic" Income Tax industry
• NO MORE IRS. NO MORE FILING OF TAX RETURNS by individuals
• Those possessing illicit forms of income will ALSO pay the FairTax
• Households have more disposable income to purchase goods
• Savings is bolstered with reduction of interest rates

For BUSINESSES:
• Corporate income and payroll taxes revoked under FairTax
• Business compensated for collecting tax at "cash register"
• No more tax-related lawyers, lobbyists on company payrolls
• No more embedded (hidden) income/payroll taxes in prices
• Reduced costs. Competition - not tax policy - drives prices
• Off-shore "tax haven" headquarters can now return to U.S
• No more "favors" from politicians at expense of taxpayers
• Resources go to R&D and study of competition - not taxes
• Global "free (and equitable) trade" becomes possible for currently-disadvanted ( http://snipurl.com/tradeinequity ) U.S. exports
• US exports increase their share of foreign markets

For THE COUNTRY:
• 7% - 13% economic growth projected in the first year of the FairTax
• Jobs return to the U.S.
• Foreign corporations "set up shop" in the U.S.
• Tax system trends are corrected to "enlarge the pie"
• Larger economic "pie," means thinner tax rate "slices"
• Initial 23% portion of price is pressured downward as "pie" increases
• No more "closed door" tax deals by politicians and business
• FairTax sets new global standard. Other countries will follow

While passionately supporting FairTax, Huckabee understands that, if elected President, Congress will have to present the bill for his signature. His call to action goes beyond his candidacy, Main Street will have to demand ( http://snipr.com/scrapthecode ) that their legislators deliver the bill.

(Permission granted to republish, in whole or part. -Ian)

[DaveDave]

The only thing that needs to happen with taxes is adjusting the brackets for inflation. Then, roll back to pre-Regan.

It is absolutely true that someone with $250K isn't wealthy. Wealthy is a class, not an amount of money. Almost no one is wealthy (top 2%). The problem is that inflation is still real even as we play the retail-wholesale game. Everything is way more expensive that it was when I was a kid. The failure to adjust the brakets has everyone thinking that they are rich or wealthy, rather than just middle class and well off. They still think middle class. They still aspire middle class aspirations. So they should pay middle class taxes. And, vote middle class issues.

This would give a tax cut to the middle.

Exempting small businesses from taxes would not generate more business starts. It would reward people for doing something in the past, rather than incentize them to do something today or tomorrow.

[DaveDave]

On this flat tax idea, we already have flat taxes that don't work.

The really cool thing about the flat tax is that the people who use the most govermental services, won't be paying for them--the wealthy. Who uses the SEC? Why are small businesses having to to SOX, a tax, or unfunded mandate? Who uses oil leases? Who uses the Coast Guard? Who is paying taxes for this stuff--the working stiff.

[Dennis Gorelik]

Don, you missed the important piece of Mark Cuban's post:
"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."

We must cut government spendings.
That would allow us to decrease taxes for less wealthy people.

I think that we don't need raise taxes on anyone (even very rich). Instead we should lower taxes on less wealthy people.

[Jason]

I don't like Mark Cuban but I can't agree more with this post.

[Mark Evans]

I'd nominate Dirk Nowitzki for vice-president but I'm not sure whether a German citizen can hold the position. :)

[Dan Ciruli]

The problem with eliminating the inheritance tax is that it allows the super rich to NEVER pay taxes on huge income.

Most of the accumulated wealth that gets taxed is would-be long term capital gains wealth (someone has millions of dollars that, if he were to liquidate, would owe cap gains on). However, instead of liquidating, he dies and leaves his wealth to his heirs.

If they subsequently liquidate, what's their cost basis? As I understand it, it's the value of the asset WHEN THEY INHERITED -- meaning the millions of dollars that the rich man accrued before he died never got taxed.

For the super rich, it's a LOT of money.

Your example (the entrepreneur who gets taxed for 55% of his life's work) sounds egregious, and that needs to be fixed.

But, as I understand it, most inheritance tax is family wealth for the super rich. It needs to be there to ensure that we don't get a situation where the gains aren't taxed.

[Alex Hammer]

You must be from the great state of Maine.

Check out our leading Maine political blog:
http://newsofmaine.blogspot.com/

[Paul King]

I'm not a tax expert Lord knows, but to my knowledge, there's nothing that prevents the super-rich to pay in more taxes than they owe (or anyone for that matter). Is there? So if they want to, let em...

What astounds me is the 'guilt' that the super-rich have - I suppose it's because they dont truly feel like they've worked for their money - especially when most of it comes from 'paper' wealth - stocks, etc. That's why he rails/has empathy about 60 year olds sweating and bleeding to get to $250k, working hard.

I don't know - back years ago I talked with Mark from time to time - he worked hard to get Broadcast.com going, and sold... I know that. I know he has worked very hard on HDNet. I know he loves the Mavs and works very hard for them... if I were still talking with Mark I'd tell him to pay in more if he wanted... but let us little guys have hope that when OUR paper comes in, that we've worked hard for - to leave the gov't out of it as much as possible. And there's the rub.

No matter the intention of ideas like this, they always have a depressing effect on the 'striving' class - those who ARE working to get 'there'. Because anything other than a tax CUT is simply a punishment for others who aren't there yet but are trying to get there.