Raising taxes on the rich

[sedonaman]

…When I looked at buying a house I was told about all the tax advantages, etc. But that’s no advantage to me since I’m sure the housing prices are simply higher because of it. It’s institutionalized dishonesty–telling us we’re getting a good deal, when for example, your tax subsidy for a mortgage is really only a benefit for the bank.

A friend who is a life-long salesman once said that people would rather be lied to than told the truth, so they actually demand this “institutionalized dishonesty”, hence there is a lot of psychology involved in selling the current system.

I posted this experiment before in which there are 10 taxpayers each with a dollar, and the government taxes each one 50 cents. The people would revolt. But the government taxes each one a dollar and gives each one back 50 cents, and they are happy.

This brings us to the second thing which is that the government has given everyone a stake in the current system. Look at the numerous deductions as supermarket discount coupons that give you dollars off. But a deal available to everyone is not a real deal. When Dick Armey proposed a flat tax of 17%, the first question out of the mouths of the reporters was, “Do we get to keep our home mortgage deduction?” His reply was that he’d have to raise the proposed 17% to 19%.

So, there is literally no hope for any sanity in the system because people would rather engage in a grand delusion that they are getting a lunch that costs less than the next guy’s.

 

[Ridgerunner]

This brings us to the second thing which is that the government has given everyone a stake in the current system. Look at the numerous deductions as supermarket discount coupons that give you dollars off. But a deal available to everyone is not a real deal. When Dick Armey proposed a flat tax of 17%, the first question out of the mouths of the reporters was, “Do we get to keep our home mortgage deduction?” His reply was that he’d have to raise the proposed 17% to 19%.

So, there is literally no hope for any sanity in the system because people would rather engage in a grand delusion that they are getting a lunch that costs less than the next guy’s.

One of my adult daughters studies coupons and discounts like a Talmudic scholar. The reality of it is that she really is rewarded. She maintains that there are essentially two levels of pricing. One is the pricing (discounted) system for those who work at finding the good ones in sufficient quantity and discarding the ones that are not worthwhile. The other is the regular retail that, in effect, subsidizes the discounted system. Her objective is to remain on the lower pricing level pervasively, and she pretty much does. She has to stay on her toes to remain there, but she has seven children and is rather proud of her ability to nearly always be on the “lower price tier” in virtually everything.

The present taxing system is not dissimilar. One might not think it fair, but it is what it is. Without going into extraordinary (and boring) detail, what one learns and labors at, and what one invests in can make a lot of difference in the taxation tier one is on. One can, in effect, trade income for wealth and thereby reduce what one pays in taxes. But it’s tricky, requires a lot of attention and labor and a significant amount of learning.

So, one could say none of the above is “fair”. And in a way it isn’t. But it has to be admitted that the coupon thing serves a commercial purpose and it’s available to everyone. It’s just that not everyone takes the time and trouble to make it really work for them.

As to the second, a good part of the tax code is actually designed to channel willing people into productive endeavors that raise the resource base, not only of the one taking advantage of it, but of the nation as a whole. The people I know who do that are extraordinarily hard-working people.

But again, is it “fair”? Not if one considers inequality of outcomes “unfair”, it isn’t.

A flat tax, then? Is that more fair? I don’t know, but I can think of ways a person could trade income for wealth under a flat tax system. It would be harder, but it could be done.

 

[sedonaman]

Good comments.

…But again, is it “fair”? Not if one considers inequality of outcomes “unfair”, it isn’t.

When they first allowed a child-care tax credit, I kept meticulous records, and after filling out the forms, it saved me a whopping $80, hardly worth the effort. I don’t think I bothered the following years. And it’s the same with coupons; some people pay full retail because they’d rather do something else with their time besides coupon clipping.

“Is it fair?” An argument can be made it is fair if most people accept it and don’t complain.

A flat tax, then? Is that more fair? I don’t know, but I can think of ways a person could trade income for wealth under a flat tax system. It would be harder, but it could be done.

Could you give an example?

 

[Ridgerunner]

Could you give an example?

1. It depends on how the tax is based. So, for example, what is “income” to a farmer or a rancher from the flat-tax standpoint? Is it “net” after expenses, or is it based on gross income. If based on gross income, then this country had better be ready for hunger, because that’s what it will cause. In farming, “net” is a very small fraction of “gross”, and a flat tax on “gross” would put most farmers and ranchers into bankruptcy. But if it’s “after expenses”, one can convert income to wealth simply by decreasing income and increasing expenditures that simultaneously build wealth. For example, if I have 200 head of cattle and want to reduce my taxable income, all I have to do is buy more cattle, because purchase of breeding stock is presently an “expense” item. And, I can rent more pasture land, which is also an “expense”. Ultimately, of course, my “income” will increase once I have as many cattle as I can manage, and have no alternative but to sell all my young stock except for replacements, thus generating “income”. But in the meantime I have increased 'wealth" because cattle are so readily marketable that they’re almost as liquid as cash. Where I once had, say, 200 mother cows, I now have, say, 500. I reduced my taxable income and built wealth with it.
2. If I am a stock investor, I could, for example, get out of any stocks I have that pay a decent dividend. (and there are a fair number of those) and re-invest the money in a stock that pays nothing or almost nothing and uses its income entirely to promote growth (and there are a goodly number of those). Since the latter (all things being equal) will increase in market value more rapidly than the former, I will have converted “income” in the form of dividends to “wealth” in the form of capital appreciation.
3. I am a salaried worker, but I don’t mind working very hard and am “wealth” oriented, not “income” oriented. I buy a “fixer upper” of a house, and put enough money into it to make it tenantable. Presently, most of the expenditures will be “expenses”. Once I get it into tenantable shape, my “income” is going to increase, and I don’t want that. So, I buy another “fixer upper” and use the income stream from the first one to pay the costs of upgrading the second one. And so forth.

Again, though, it depends on what “income” the flat tax is based on. If it’s simply “gross”, there will probably be significantly less investing in productive hard assets than presently. If we have the same or similar “expense” structure that we do now, it will still be possible to convert “income” to “wealth”.

 

[copperblade]

So, one could say none of the above is “fair”. And in a way it isn’t. But it has to be admitted that the coupon thing serves a commercial purpose and it’s available to everyone. It’s just that not everyone takes the time and trouble to make it really work for them.

But if everyone did that, then it would just be a complication that serves no one

 

[copperblade]

Good comments.
When they first allowed a child-care tax credit, I kept meticulous records, and after filling out the forms, it saved me a whopping $80, hardly worth the effort. I don’t think I bothered the following years. And it’s the same with coupons; some people pay full retail because they’d rather do something else with their time besides coupon clipping.

Or maybe more to the point: is the work of coupon clipping work that has real value? It’s the same thing as jobs created for the sake of creating jobs.

 

[Ridgerunner]

But if everyone did that, then it would just be a complication that serves no one

Sure. But people don’t. I am at times edified by the example of the young men who work at the feed mills around here. They draw a wage and have health insurance. But they’re also the ones who haunt the country livestock auctions at night and buy the calves and even grown cattle that nobody much wants. They rent out land from somebody who has land to rent and (with much labor) slowly build up their herds and their wealth so they can buy land of their own, and so on. Anybody could do it, but few actually do. One of the young ladies working in one of those mills has saved her money to buy haying equipment and does custom haying for farmers in the evenings and on weekends in addition to her regular job. Anybody could do that too, but few ever do. Same mindset.

 

[Ridgerunner]

Or maybe more to the point: is the work of coupon clipping work that has real value? It’s the same thing as jobs created for the sake of creating jobs.

If you cut your household expenses in half or more, it has real value to you. Perhaps not to your neighbor, but it does to you. One of the examples (and I don’t remember how she did it…sometimes you can multiply values, but I don’t know how.) is this. She’s a stay at home mom with seven kids. Somehow or other she managed to get a year’s supply of top brand paper diapers for some ridiculous amount like $10 or something. Those are really expensive at retail. And that was by far not the only thing she did of that nature.

Maybe it can be thought of in the same way as creating jobs for the sake of creating jobs, but to the person doing it, it isn’t. Her husband’s brother is an investment banker. Finds undervalued entrepreneurships and finds money to develop their business. Ultimately, he takes them public and everybody makes a lot of money (or loses). In a way, that’s not really different from the coupon thing. You find value nobody else is seeing or using or is too lazy to hunt down.

A friend of mine has a very lucrative business in brokering poultry offal. Buys it all over the country and sells it all over the country. He doesn’t own a single chicken or turkey himself. He is just a person who can see value where nobody else does and finds a way to get it to the people who can utilize it.

 

[sedonaman]

Or maybe more to the point: is the work of coupon clipping work that has real value? It’s the same thing as jobs created for the sake of creating jobs.

Which reminds me of another observation: the current tax system is largely taxation for the sake of taxation.

 

[sedonaman]

… You find value nobody else is seeing or using or is too lazy to hunt down.

A friend of mine has a very lucrative business in brokering poultry offal. Buys it all over the country and sells it all over the country. He doesn’t own a single chicken or turkey himself. He is just a person who can see value where nobody else does and finds a way to get it to the people who can utilize it.

I had an uncle [who died long ago] who was from the old country and spoke broken English. He told me once that you can sell anything any time; therefore, you make money on the buy, not the sell. I’ve tried it, and it’s really difficult to find something undervalued.

 

[Ridgerunner]

I had an uncle [who died long ago] who was from the old country and spoke broken English. He told me once that you can sell anything any time; therefore, you make money on the buy, not the sell. I’ve tried it, and it’s really difficult to find something undervalued.

That’s true. Your post also reminds me of something an old entrepreneur once said to a fellow who was eager to go into a deal with him along. The entrepreneur wasn’t all that impressed and didn’t like being rushed, and demurred. Well, the younger fellow urged him some more saying “the deal would get away”. The wise old entrepreneur told him “Just remember; there’s ALWAYS a deal.”

Also, sometimes you almost can’t mess up a buy/sell situation, though. Some years back, my son and I were driving in a resort area and i pointed out to him a piece of land here that I could have bought years ago for “X” and a piece of land there I could have bought years ago for “Y”. My son exclaimed “It’s worth several times that now, why didn’t you buy some of it.” My reply was “It was just as expensive then as it is now, just on a different scale.”

And that’s true of a lot of things. The passage of time alone can make an ordinary deal into a good deal, as long as you can do it to begin with and hold on. But your uncle was right. Not very many things are truly underpriced. The degree to which something is “underpriced” is almost always anticipating what it will do in the future.

 

[copperblade]

All I’m saying about things like coupons is that it’s a net drain on resources. The company spends more money producing and honoring coupons than not doing so. They get a return by generating interest or demand in their product. Then a person who wants to use the coupons spends time and resources to get that advantage. It may be a value “to them” but the overall effect is a waste of time and resources on the system. The people who “win” are the coupon cutter and the coupon maker, both by doing “work” that generates no real value to the system. That’s why I tried to make the first point that if everyone did it, it would just be drain on resources.

Ok, so it’s not exactly true because I don’t think the average coupon-cutter really wins. (Some people spend a fortune on savings )Your daughter may be clever enough to do so, but I think generally coupons get people to buy more of something they wouldn’t normally buy which minimally adds to the time-value of money for the seller (assuming the product doesn’t spoil, or would have been used anyway). But your daughter is in a unique position because she has to stay home (maybe?) with 7 kids, that totally makes sense to cut coupons. Just like it would make more sense to get a costco membership. But I think a lot of people let coupons influence their buying decisions.

But why is this related to taxes? Because the net effect of all the credits, loopholes, etc. in the tax code I believe has become a net resource drain. There’s a whole industry of able-bodied people who could be doing work of a different sort than just playing the tax accounting game. Or, keeping with the theme, crunching numbers just for the sake of crunching numbers. Sure, just like you said that cutting coupons is a value to your daughter, a tax preparer is a valuable service in the sense that you treat part of the system as a black box. But if you look at the system as a whole, you can see how we’d all save something if coupons weren’t created or if taxes were simpler.

 

[Monte_RCMS]

Many of the “lesser rich” are the owners of small businesses.

Here’s how higher taxes and higher regulations impact the owners of small businesses … the lesser rich … the law of unintended secondary consequences: …[from an email I just received]

My Op Ed in today’s Investor’s Business Daily recaps a decade of relentless interference by the government with the ability of small businesses to raise money, which in turn has materially contributed to our surprisingly stubborn unemployment situation.

---

War on Small Businesses is Keeping Job Gains Low
by Eric Singer | Posted 7/12/2011 6:05 PM ET

Last month’s unemployment figures shocked by being worse than expected by every single economist surveyed. Unemployment will likely stay surprisingly high because government is winning its long war of attrition against the primary driver of employment — small business.

Small businesses are starved for capital and inundated with regulations. The starvation is the cumulative result of years of self-inflicted wounds affecting capital sources, and regulations are accelerating, all with enormous negative effects on our economy.

For small companies, there are four main sources of outside capital: public or IPO money, venture capital, bank loans, and family and friends. At the U.S. peak in the '90s we had nearly 700 IPOs per year. In 2010 we did 154, mostly for larger companies, many of which were Chinese.

Today, small U.S. companies are effectively shut out.

Without a robust IPO market, the venture capital market suffers. Venture capitalists need IPOs to validate their judgments and gain their limited partners’ confidence.

Bank loans to small business were down an astounding 69% from 2007 through 2009 as banks struggled with bad mortgage paper primarily induced by government housing policies, higher capital requirements and an avalanche of new regulations. And families and friends had their seed risk capital impaired by the epic housing collapse.

Bankers In The Dark

How did we lose our way so badly? Many things contributed, but our government took both good and bad situations and relentlessly complicated them, sometimes with the best intentions but the worst outcomes.

In the '90s, the Securities and Exchange Commission tightened “suitability” scrutiny so much that the retail market for small-cap IPOs was decimated. Small investors were made “safer” at a cost of not participating in the growth of small companies they naturally lined up with by size.

In 2000, the SEC mandated decimalization of stock prices, making it unprofitable to make markets or provide research coverage for small companies. It was ostensibly consumer friendly — but just for large companies and large brokerage firms. So now we have high frequency trading but shallower commitment to individual stocks and higher overall volatility, a bad trade-off.

In 2001, Eliot Spitzer, then New York state attorney general, one-upped the SEC by using the 1921 Martin Act of New York to threaten brokerage firms that had banked and provided stock research on the same companies.
This law is the jurisprudential equivalent of the Creature from the Black Lagoon. It judges offerings using an amorphous standard of substantive fairness, not whether there had been adequate disclosure and an intent to defraud, and it limits the right to counsel.

The outcome was a $1.5 billion research settlement by the large securities firms where they conveniently agreed with the government to all simultaneously drop research coverage of one third of the companies they covered without any immediate short-term competitive disadvantage relative to their large peers.

The real effect was to prevent research-analyst participation in banking revenues, even with disclosure of conflicts, so analysts stopped helping bankers figure out where best to spend their time, and the bankers focused only on the largest deals. Cutting bankers off from industry knowledge leads to poor capital allocation.

Job Generators

In 2002, Sarbanes-Oxley was passed, requiring re-confirmation of what was already available in most financial statements. By 2004, small companies were budgeting $ 2 million for IPO expenses, and an extra million dollars in annual oversight expenses, and often avoiding going public.

The traditional public market for small company IPOs practically disappeared. By 2005, 24 of the 25 largest IPOs were done overseas. Today the NYSE is being acquired by the Germans, and Goldman is laying off bankers in New York and hiring them in Singapore. Our talent is going overseas. Why should it return?

But small companies provide 65% of new jobs. Large companies recently named to the Jobs Council don’t always hire here. General Electric laid off 17% of U.S. employees between 2005 and 2009, while keeping foreign jobs flat. They can source labor anywhere in the world.

Having GE make suggestions about how to raise U.S. employment is like putting North Korea as the head of the U.N. Disarmament Conference. Think light bulbs. In contrast, small companies source American labor because they live here.

Strangling Capital

So where are we today? The government is carrying on a surge in its war against small companies. Having driven many IPOs offshore with Sarbanes-Oxley, which had only 16 regulations, Congress recently passed Dodd-Frank, which has 243 new regulations.

JPMorgan’s Jamie Dimon recently asked Fed Chairman Ben Bernanke if he considered the cumulative impact of each regulation. Bernanke admitted he had not. The ongoing surprisingly bad unemployment numbers confirm that no one in charge is thinking about the cumulative impact of each tiny strangulation of capital and operating capability.

We need to go back to basics, cut these Lilliputian ropes and unleash the potential giant economy that is still on its back.

 

[sedonaman]

…But why is this related to taxes? Because the net effect of all the credits, loopholes, etc. in the tax code I believe has become a net resource drain. There’s a whole industry of able-bodied people who could be doing work of a different sort than just playing the tax accounting game. Or, keeping with the theme, crunching numbers just for the sake of crunching numbers. Sure, just like you said that cutting coupons is a value to your daughter, a tax preparer is a valuable service in the sense that you treat part of the system as a black box. But if you look at the system as a whole, you can see how we’d all save something if coupons weren’t created or if taxes were simpler.

If the income tax were replaced by a simple sales tax, even the IRS could be reduced to small field offices checking up to make sure businesses were turning in the right amount. A good portion of the workforce could be put to better economic use, and the individual would have very little contact with the government. It might be regressive, but so what? No system is perfect, and I’d bet dollars to doughnuts that poor people would still find a way to pay for their 50" TVs.

 

[Ridgerunner]

Many of the “lesser rich” are the owners of small businesses.

Here’s how higher taxes and higher regulations impact the owners of small businesses … the lesser rich … the law of unintended secondary consequences: …[from an email I just received]

My Op Ed in today’s Investor’s Business Daily recaps a decade of relentless interference by the government with the ability of small businesses to raise money, which in turn has materially contributed to our surprisingly stubborn unemployment situation.

---

War on Small Businesses is Keeping Job Gains Low
by Eric Singer | Posted 7/12/2011 6:05 PM ET

Last month’s unemployment figures shocked by being worse than expected by every single economist surveyed. Unemployment will likely stay surprisingly high because government is winning its long war of attrition against the primary driver of employment — small business.

Small businesses are starved for capital and inundated with regulations. The starvation is the cumulative result of years of self-inflicted wounds affecting capital sources, and regulations are accelerating, all with enormous negative effects on our economy.

For small companies, there are four main sources of outside capital: public or IPO money, venture capital, bank loans, and family and friends. At the U.S. peak in the '90s we had nearly 700 IPOs per year. In 2010 we did 154, mostly for larger companies, many of which were Chinese.

Today, small U.S. companies are effectively shut out.

Without a robust IPO market, the venture capital market suffers. Venture capitalists need IPOs to validate their judgments and gain their limited partners’ confidence.

Bank loans to small business were down an astounding 69% from 2007 through 2009 as banks struggled with bad mortgage paper primarily induced by government housing policies, higher capital requirements and an avalanche of new regulations. And families and friends had their seed risk capital impaired by the epic housing collapse.

Bankers In The Dark

How did we lose our way so badly? Many things contributed, but our government took both good and bad situations and relentlessly complicated them, sometimes with the best intentions but the worst outcomes.

In the '90s, the Securities and Exchange Commission tightened “suitability” scrutiny so much that the retail market for small-cap IPOs was decimated. Small investors were made “safer” at a cost of not participating in the growth of small companies they naturally lined up with by size.

.

EXTREMELY interesting, and worthy of further study on my part. I am only vaguely aware of the IPO world, and had not considered these effects of government overinvolvement.

The small businesses of which I am aware are generally not the IPO candidates, but I do know this much. Notwithstanding that there is plenty of bank money available for lending to small businesses, and bank willingness to loan it, there are two problems, one greater than the other:

1. In typical fashion, bank regulators always want to close the barn door after the horse has escaped. Consequently, they are making bankers do a lot more in the way of critical analysis than they used to. Trouble is, a good banker knows very quickly who is loan-worthy and who isn’t, and the additional documentation and critique just waste time and can make a good loan look like one for which the bank should establish reserves.
2. But by far the worst problem is that small businesses won’t borrow money. I get calls from bankers all the time wanting to loan money, but I’m not about to borrow money. In that, I’m like a lot of businesses. I’m not going to expand in the face of a government that is hostile to small business in so many ways, and whose radicalism has probably not even begun to be seen in its full aspect. If Obama loses in 2012, I’ll look at it again, but not until. If he wins, I’ll be even more risk-averse than I am now. It’s one thing to take business risks…every businessman faces that. It’s another to have the government as your primary source of risk; risk you can’t possibly foresee or plan for, and which you can’t possibly counteract.

Sorry about shortening your post. Couldn’t help it.

 

[sedonaman]

…If he wins, I’ll be even more risk-averse than I am now. …

If he wins, he’ll pull out all the stops.

 

[Ridgerunner]

All I’m saying about things like coupons is that it’s a net drain on resources. The company spends more money producing and honoring coupons than not doing so. They get a return by generating interest or demand in their product. Then a person who wants to use the coupons spends time and resources to get that advantage. It may be a value “to them” but the overall effect is a waste of time and resources on the system. The people who “win” are the coupon cutter and the coupon maker, both by doing “work” that generates no real value to the system. That’s why I tried to make the first point that if everyone did it, it would just be drain on resources.

Ok, so it’s not exactly true because I don’t think the average coupon-cutter really wins. (Some people spend a fortune on savings )Your daughter may be clever enough to do so, but I think generally coupons get people to buy more of something they wouldn’t normally buy which minimally adds to the time-value of money for the seller (assuming the product doesn’t spoil, or would have been used anyway). But your daughter is in a unique position because she has to stay home (maybe?) with 7 kids, that totally makes sense to cut coupons. Just like it would make more sense to get a costco membership. But I think a lot of people let coupons influence their buying decisions.

But why is this related to taxes? Because the net effect of all the credits, loopholes, etc. in the tax code I believe has become a net resource drain. There’s a whole industry of able-bodied people who could be doing work of a different sort than just playing the tax accounting game. Or, keeping with the theme, crunching numbers just for the sake of crunching numbers. Sure, just like you said that cutting coupons is a value to your daughter, a tax preparer is a valuable service in the sense that you treat part of the system as a black box. But if you look at the system as a whole, you can see how we’d all save something if coupons weren’t created or if taxes were simpler.

I don’t for a minute doubt that the current tax system uses up a lot of people’s time and money, probably without adequate reason.

Of course people let coupons (and “sales”) influence their buying decisions, and I don’t know how many actually save any money using them. They are intended as “loss leaders”, and that’s just a fact. It must work or they wouldn’t do it. But there really is a level at which, with study and discipline, you can cut household expenses by literally thousands of dollars per year. Sure, you have to have the time and ability to figure deals out and the discipline to stay on your program. Is there a productive purpose in it? I think so. First of all, she has 7 children, and they are of potential future value to the society as contributors, so her efforts do have purpose in that regard. Second, it frees up family income that can be used for other purposes that are either productive in themselves or utilize the production of others.

It’s not so very different from something I do. I do a bit of ranching, besides my “day job”. If I study characteristics and animal husbandry sufficiently so I can judge a good animal when I see one, I can (and do) go to sales and buy animals that have some trifling defect that others think are significant or are too prideful to let others see them bid on. I have never been to a sale in which the owner/seller didn’t end up “marking down” an animal for some reason that doesn’t matter. (e.g., a superficial injection site hematoma or very slight “off” markings that are unlikely to repeat in offspring and don’t matter anyway.) I always go deal for some of the animals that didn’t fetch the “base bid” after the sale is over. The seller knows the defect is insignificant, and I know it, and he knows I know and i know he knows I know. And he knows, as I do, that the only reason the animal didn’t bring the “base bid” is crowd mentality. Still, if he wants to move the animal, he has to deal. It’s part of the game he’s in. And to the extent I save money, I can apply it to other useful enterprises. He gets money in his hand and doesn’t have to feed the animal anymore or gamble on sending it to the stockyard.

 

[Ridgerunner]

If he wins, he’ll pull out all the stops.

Of that, I have not the slightest doubt. And I’m far from being the only business person who believes that.

 

[TheRealJuliane]

70% of the taxes are paid by 10% of the population.

That already seems unfair to me.

 

[TheRealJuliane]

All I’m saying about things like coupons is that it’s a net drain on resources. The company spends more money producing and honoring coupons than not doing so. They get a return by generating interest or demand in their product. Then a person who wants to use the coupons spends time and resources to get that advantage. It may be a value “to them” but the overall effect is a waste of time and resources on the system. The people who “win” are the coupon cutter and the coupon maker, both by doing “work” that generates no real value to the system. That’s why I tried to make the first point that if everyone did it, it would just be drain on resources.

Ok, so it’s not exactly true because I don’t think the average coupon-cutter really wins. (Some people spend a fortune on savings )Your daughter may be clever enough to do so, but I think generally coupons get people to buy more of something they wouldn’t normally buy which minimally adds to the time-value of money for the seller (assuming the product doesn’t spoil, or would have been used anyway). But your daughter is in a unique position because she has to stay home (maybe?) with 7 kids, that totally makes sense to cut coupons. Just like it would make more sense to get a costco membership. But I think a lot of people let coupons influence their buying decisions.

But why is this related to taxes? Because the net effect of all the credits, loopholes, etc. in the tax code I believe has become a net resource drain. There’s a whole industry of able-bodied people who could be doing work of a different sort than just playing the tax accounting game. Or, keeping with the theme, crunching numbers just for the sake of crunching numbers. Sure, just like you said that cutting coupons is a value to your daughter, a tax preparer is a valuable service in the sense that you treat part of the system as a black box. But if you look at the system as a whole, you can see how we’d all save something if coupons weren’t created or if taxes were simpler.

The “extreme couponing” people are actually abusing the system, and eventually the companies will stop printing coupons, as they will be losing money on the deal.