What do you think of this idea that the top 1% cover 38% of federal income tax vs. 2.7% for the bottom half”?

Tells me the rich aren’t paying their share. The top 400 people (that is way fewer than the top 1%) control over 50% of the wealth in the United States.

Some people on the bottom half have next to no income. A lot of people on the bottom half don’t have enough income to be tax liable. For example, a high school kid at a part time job might not make enough a year to have to pay taxes. And they’re far from alone in that.

Its an attempt to subvert logic and focus people on welfare recipients and the like rather than the people they should be focused on collecting more taxes from, those on top.

@klutzaroo That is similar to my line of thinking, if you are not making hardly any money, of course the percentages are going to look disproportionate.

@zenvelo Good point.

It’s the tired old dishonest cherry-picking line, choosing one tax and pretending that’s the whole picture.

Here’s my version:
If you make $60,000 per year, you pay 6.20% Social Security tax.
If you make $600,000 per year, you pay 1.10% Social Security tax.
Is that fair?

You can play the same kind of games with gas taxes, etc.

Taxes for the wealthy in the US are at the lowest point in decades. And far, far below the taxes paid by people in every other large developed nation.

If being poor is easy, the wealthy would forgo their riches and get in line to become paupers. Isn’t happening now. Never happened ever.

If I was one of the top 1% rich, I would pay less taxes because I don’t want to spend on Goverment okayokay services, I rather pay the best services because I can easily afford it and get more attention to me. If I chose that, I would automatically have less taxes. The goverment knows that people aren’t going to fully pay for something that the tax payer doesn’t get the service for.

@Trojans40 But the point is, you don’t get to choose. Its not your decision. The top earners should be paying a proportionate chunk of their income. They benefit from things that are taxpayer funded, like roads and hospitals and public schools where their doctors, lawyers, whatever got their first education. There isn’t a choice and tax breaks for the wealthy just because they can throw a lot of money and influence into a reelection campaign is stupid.

@klutzaroo I agree on tax breaks for reelection is stupid. And a lot of rich get their benefits for that. I can’t wait until the rich keep paying for their new BMWs and Phantons when the roads become 3rd world degree roads. I even think countries like Canada and Germany outroads us by the quailty, because of simply taxes.

As a rich person thou, you can chose. The poor can’t chose, or is that they can’t “afford” to choose? Would that poor person suddenly become rich would still pay all of his poor taxes? It like saying a rich person would pay taxes, or to donate the money? Is it because that the rich donate the money more than poor pay the taxes that it make sense that the rich get a tax break?

@Trojans40 You’re just not getting it.

Maybe I am not getting it, but we all look at the Rich. But what do we look at them as? We look at them as evil greedy suns of the guns? We look at them as holy kings with rightous movement? Do we envy that we are not rich ourselves that they should pay more than the share? Is it fair how we the poor treat the rich? Is it fair how we expect more from the rich as well?

@Trojans40 The rich have used their wealth to elect politicians who are rewarded by structuring the laws and tax rates to favor the rich, which in turn gives them even more wealth, all on the backs of the middle class. It has gotten more and more disproportionate over the last thirty years.

The rich benefit from the government investment in infrastructure and investment in human capital. But now they refuse to pay their share.

That is true that the rich has used their wealth for numberous reasons other than just electing politicians as well. I agree that the bastards politicians have turn most of their backs to the middle classes.
How do you purpose how much they should pay back to the goverment? An percentage? 40% of their income as an example.

I don’t know the numbers, but the general sentiment is true: the top 1% do pay a huge percentage of the federal income tax.

“Wouldn’t it make sense that the most wealthiest people in country, would pay more taxes,”

They do in absolute terms. Even if everyone paid a fixed percentage tax rate, the richer you are the more taxes you would pay (in general, with all sorts of loopholes maybe). The question is:
a) should taxes be progressive
b) how progressive should they be
For question b, this requires looking at the numbers. Thats the problem with the debate is that most of us (myself included) don’t know the numbers very well and don’t understand them very well either. Just saying “the rich should pay more taxes” doesn’t come close to answering the question.

Of course, you need more than the numbers. You do need to decide how much you think that rich people should pay for stuff that poor people use (e.g. roads). You also need to look and see if higher taxes will have other collateral effects such as changing incentives.

One last point, sometimes lower tax rates can lead to higher total taxes collected. Sales tax, etc… is based on transactions. Lower taxes means more disposable income means more transactions means higher taxes. Of course, if you lower taxes too much, even the increased number of transactions won’t give you enough total taxes collected.
At 100% taxes no one will earn anything or spend anything so no taxes will be collected.
At 0% taxes, you will have a lot of transactions but no tax collections.
Somewhere in between maximizes taxes collected.
So the question is, for rich people, are the lower taxes increasing the number of transactions enough to increase the total taxes collected. I have no idea, you’d need to check with an economist.

@roundsquare No, at the current tax rates they are not generating enough growth or expansion to offset the eduction in revenue.

Just a repeal of the Bush tax breaks for those earning over $250,000 would reduce the projected deficits enough to take all the current deficit conversation off the table.

It is an excellent example of the old adage, “Statistics never lie, but a lot of liars are statisticians.” What it quite deliberately ignores is that the top 1% pay much of their tax burden in income taxes and in capital gains taxes, both of which count for this statistic. But the bottom 50% pay almost all of their taxes in payroll withholding taxes, and that is not income tax per this statistician. Well, neither are capital gains taxes. But he that makes the chart gets to decide what words count as income taxes and what do not.

The myth that our poor billionaires are an endangered species about to be taxed out of existence is utter nonsense. Top tax rates have fallen for them by 63% from the end of WWII to today, and lo and behold, our millionaires were doing just fine during the War. Ever heard of Howard Hughes? He didn’t get famous for his poverty.

The truth is that the top 1% have not only gotten a massive tax cut, they have gotten estate taxes decimated and tons of tax loopholes installed so that it’s now easy to make in excess of $1 million and pay NO income tax if you play your cards right. The wealthiest 1% now hold 40% of all the wealth of the nation, leaving just 60% to divvy up among the other 99% of us. And billionaires like the Koch Brothers and Rupert Murdoch pay right wing think tanks to churn out misleading statistics like the one cited above because THEY WANT IT ALL.

There is no level of appeasement with these people. We have given them all the breaks for 30 years now waiting for the money to trickle back down. Where are the jobs? I say now, rather than shipping off even more to them, let’s just keep it and let them start paying their fair share of ALL taxes, not the ones some right-wing think tank chooses to call income taxes.

Those with the broadest shoulders should carry the heaviest weight

It may be time for a little sanity here. Tax rates don’t work the way most of you think they do. When the Bush tax cuts were enacted in 2003 the top 1% were paying 34% of the total income tax burden. By 2008 the top 1% were paying 38% of the total income tax burden. And that was at a lower rate. Not only did Government Revenue climb from $1.8 trillion to $2.5 Trillion but the rich paid a higher percentage of that revenue. In fact the top 1% paid a higher percentage of the tax burden under the Bush tax cuts than they did under the Clinton tax hikes.

There is an article that explains what happens as you raise or lower tax rates. The higher the rate, the more incentive there is for the rich to shelter thier income. And when they are sheltering thier income it is not being put to the most productive use. Ergo, the economy suffers.

It’s always easy to use the cutesy slogans, “tax the Rich”. “make them pay thier fair share”, but it doesn’t work out that way and you actually exacerbate the problem rather than fixing it. We have a lot of history behind us and even a cursory glance at it will show you how it works. I can only wish that the people would take their head out of the sand, stop the incessant class warfare, and do what’s right for the country for a change. We need to grow the economy to solve our problem. And tax hikes will do just the opposite. Think it through for a change.

@Jaxk is right here, there is always a tipping point where you try to tax the rich too much and they take their “business” so to speak elsewhere. The economy relies on the rich as they are usually the people driving the big businesses, I stand by my earlier comment but there does come a point where you can tax people so much that they literally think to themselves ‘What’s the point in even working’ and hang up their spurs, which doesn’t really help anyone.

@RareDenver Even when the marginal tax rate was 90% on the most wealthy, that never stopped people from trying to earn additional income. During the expansion of the 1960’s, the marginal rate was 70%.

Howard Hughes and the Hunt Brothers never hung up their spurs. That argument has been used for decades but no one ever says they’ve stopped working because the tax rate is too high.

Years of incessant tax cuts for the wealthy were followed by the worst recession in 80 years.

Republican ideology would be laughable if the rest of didn’t suffer from it.

What these figures say to me is that there are a lot of underpaid people in the United States and that the minimum wage must be too low. If 50% of the people in a democratic country are underpaid you have to wonder how truly democratic the country is.

@zenvelo I don’t know who Howard Hughes and the Hunt Brothers are. I don’t have any experience of the US tax system either being a UK citizen. However, I do experience the general theories of taxation and citizenship in a socialist society. There’s a summary I gave of our tax system here

@zenvelo

Do you really believe that Howard Hughes was paying 70% of his income in taxes? Finding good tax data from 1950 is not easy but according to this study The top 10% of income earners in 1950 paid about 18% effective tax rate. That’s taking the tax info from figure F and using the $25,000 (a little over $200,0000 in today’s dollars). 52.6 million total returns 5.7 million over $25 K or just over 10%. They earned $280 million in total income and paid $51 million in taxes. About 18.2%. And that with a top tax rate of 91%. Today the top 10% pay about 18.7% and that’s with a top rate of 35%.

I don’t want to confuse the issue but keep in mind that in 1950 there was no state income tax. Now most states have it with states like California topping 10%. It’s amazing how consistent these numbers are regardless of the rate. What is not consistent is the government spending. In 1950 federal government spending was 15% of GDP. Today we are topping 25%. Taxes have a major impact on economic growth but don’t really redistribute the wealth as many of you would like.

It is easy to get sound bites and make a fairly convincing argument from them, but it seems that much of the tax debate largely ignores the middle and focuses on the extremes without acknowledging that the effective tax rate is a bell curve (largely because the top incomes are mostly capital gains and not wages, thus are taxed at less than half the rate “normal” income) and income distribution is rather skewed with some earning >100 times the cutoff for the highest bracket, thus making progressive taxation rather moot.

@jerv

There’s an old story that talks about the tax system is plain english. I know we want to beat up those that earn and pay the most but consider this before going much further.

Our Tax System Explained: Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers,’ he said, ‘I’m going to reduce the cost of your daily beer by $20.’ Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,‘declared the sixth man. He pointed to the tenth man,’ but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I got’

‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

@Jaxk Loved it! Thanks for sharing.

@Jaxk I know that story, and maybe its because I look at numbers through autistic eyes, but that story broke down at “And so”. In fact, it seemed like everything after that was a non sequitur because of the rounding. Always has, still does.
Where is the next straw man?

Okay, maybe that is a bit strong, but it’s obvious that the bartender is bad at math.

The big question in my mind is what percentage of the income is taken in by the top 1%. If they earn 38% of all the income earned, then paying 38% of the taxes seems just. I have a feeling they earn more than 38%.

@JLeslie

The answer to your question is on the link I posted above. The top 1% earn 20% of the income and pay 38% of the tax bill. Is it still equitable?

If it were remotely linear, I would agree.

I need to update my info, but I know that it wasn’t terribly long ago that the untaxed earned ~15% while the top tiers earned 50% of the income and paid closer to 40% of the taxes. The problem is that that left the group in the middle that earned 35% of the income paying 60% of the taxes!

As I said, start looking at the middle when arguing what is/isn’t fair.

@Jaxk Thanks. I guess I did not skim the answers well enough. With @jerv info, I would say the burden on middle class is way more unfair than what is happening to the rich. I’ll say what I always say. We need to pay a better wage to people at the bottom, so more people can pay taxes. Why shouldn’t people who are working hard be paid well for their labor? Having a middle class has contriubuted so much to America’s economy and prosperity in our history. It isn’t a surprise to me that America is having a little trouble right now with how the wealth is shifting more and more to the top.

@jerv

I can’t believe you’re haggling over the numbers. How’s about I eliminate the rounding for you.

the first four pay nothing
the fifth guy pays $.80
the sixth guy pays $2.40
the seventh guy pays $5.60
the eight guy pays $9.60
the ninth guy pays $14.40
the tenth guy pays $47.20

Does that solve the problem for you? Or was the ‘And So’ a gramtical problem you can’t get past?

And just for the record

“the group in the middle that earned 35% of the income paying 60% of the taxes!”

Not in my lifetime and I suspect I’m a lot older than you. You really do need to look at the facts rather than just making up numbers.

@JLeslie

First, let’s be clear, @jerv numbers are simply made up. No matter which group you look at, you can not come up with a group that pays a higher share of tax than thier share of AGI below the top 10%. So, I’m confused by your comment about the middle class. Let’s take a look at those that might be considered ‘Middle Class’. If your AGI was between $67,000 and $113,000, you would be in the top 25%-10% category. That group earned 21.6% of all income and payed 16.2% of all income tax. In other words, they earned a larger portion of the income than they paid in taxes. I don’t get the problem.

As for the lower income (bottom 50%), those below $33,000, you have to remember that a sizable chunk of those people pay no tax and have no job. Merely file taxes for the income credit. This group also contains the lion’s share of retirees. Those living on Social Security. It’s extremely risky to make snap judgements that they are under paid without looking at the numbers AND the circumstances.

@Jaxk Made up? Hardly. The problem is that some sources I see use AGI while some use just straight wages. I know that screwed me up in a past discussion on this issue. And if you don’t believe I am haggling about numbers, especially when rounding causes significant fluctuations, then you are in no position to say I am making stuff up in the first place. Pot, kettle…
It also proves that you don’t know me very well.

But I don’t have my computer tonight, which limits my data checking, so let us both get a good nights sleep (which isn’t going to happen for me tonight) and get back to each other when I don’t have to work from memory and you are not cranky, eh?

This question I asked a while back about taxes, and who pays how much at each income level probably has the math. I will look through it later today. It had links to IRS data and others.

From that Q I posted this is IRS data for 2006 with the percent of total. It does look like the middle class pay a much bigger oercentage to the total unless I am misunderstanding the data. I am also not sure if middle class tops out at $250 or $1 million or counting everything under the 1% but above the poverty line? Not sure how we are counting.

By the way it looks like the category of $200k to $500k gets screwed the most making 13% of the taxable income and paying out 17% of the taxes.

I live in Ohio, in a county that borders Columbus, the Capitol city. The county in which Columbus is located has good roads. Licking County, my county, has terrible roads and
my car has needed numerous
repairs because of them. According to @jaxk, our taxes
should remain low because
we may not need to use
certain roads. How about
having to pay for the repairs to
my car when do need to drive
on them? I think this also can explain things such as paying for schools, etc. Because, after all, I’m not still in school. What happens to our society when the educational standards lower?

I think the root of the problem is that earned income is taxed more than unearned income. While that makes sense for those in the lower brackets, it doesn’t make as much sense for those that need the money merely to invest as opposed to survive.

Reagan had the right idea by closing loopholes, but didn’t go quite far enough.

@jerv

OK I was a bit harsh. The problem is your numbers were so far out from reality, and it appeared people were believing them. I would have asked for a source but I know there is no legitimate source that would come anywhere near those numbers. And just for the sake of clarity, how does rounding to even dollars cause significant fluctuations. They look pretty minor to me and don’t change the story even slightly.

@JLeslie

Since this tax issue has been going hot and heavy for three years now (actually since 2003) I would assume we are using the definition of rich that Obama is using. That would mean anything over $250,000 (or $200,000 depending on exactly which program he’s pushing). It looks like the data you posted is the same as the data I posted just sliced a little differently. That’s not surprising since they both come from the IRS. If you look at the numbers, everyone making over $200K pays a larger percentage of the tax than their share of the income. The group from about $200K to $1 million is likely to be the hardest hit by raising the rates. They are the people either drawing a salary or operating a small business. As such thier income is taxed at the normal rates. Those with huge incomes come from investing, stock options or the one time sale of a business. These are taxed as capital gains. Raising the individual rate won’t affect them.

@GracieT

We have been discussing federal taxes. State and local are an entirely different argument. I always have trouble when we talk about federal taxes and expenditures and then people bring up police, fire fighters and roads. Those are state and local issues not federal and as such are handled quite differently. Hell I have trouble with my homeowners association but I don’t want the federal government to raise taxes to solve it.

@Jaxk First off, remember that you are talking to someone who spends their shift working to no less than three decimal places. Now let’s take that fifth guy who went from $1 to 0 to $0.80.
The corrected version nets him a 20% saving as opposed to 100%; a discrepancy I find statistically significant.

I dint have much time at the moment, but suffice it to say that I an not satisfied with the bartenders solution.

BTW, I remember now; those numbers were for wages, not income.

@Jaxk That is why capital gains tax is unfair. But, there are many many people between $250k and $10 million who do draw a salary as part of their income. I know several.

Oh, and I am all for raising the rates for people over $1 milliom so you don’t have to worry about the people below $1million.

@JLeslie There is a reason that we added a couple of new tax brackets at the top, but the cutoff point makes little sense when you factor in the income discrepancy just within the top bracket alone.

Now, I understand that they want to incentiveize investing, but ki think they went a little okay, way overboard. If they close (or even tighten) that loophole, I think the rest of the tax system will be easier to fix in an equitable manner. And hopefully one that more closely follows the extreme L-curve.

@JLeslie

Nothing is ever as simple as it appears. Remember that when you start raising the capital gains tax you are affecting a lot more people than you think. About a third of those people listed as millionaires each year are one time events. That means it was the sale of a business or stock accumulated over their lifetime, generally for retirement. And that there is no deduction for capital gains. If you sold a business for $1 million, And this is the guy we all hate. We need to punish him and make him pay his fair share because he earned a $million. for retirement that means you net after taxes $850K. If we raise the rate to 30% you net $700K. At today’s rate for safe savings (about 2% interest) you would then have an annual income from your life’s work of $14,000. Hardly a nest egg. And this is the guy we all hate. We need to punish him for making sooooo much money.

@Jaxk Sadly, you are correct that it isn’t simple. However, that is still far better than most Americans manage; a fact that I find sadder.

@jerv

I think you’re more critical of the average American than I am. The tax code and the ramifications from changes to it are fairly complex. When Geithner was looking to run the IRS he used the complexity of the tax code as a reason for not paying his taxes. Most of America said sure that sounds reasonable, but if the head of the IRS can’t understand it why would anyone criticize the average schmuck that has another job, for failing to realize all the ramifications.

Most of the difference is in how we look at government. I see the ideal government as being non intrusive. Not a big part of my life. Unfortunately it has grown so large, so all encompassing that everything I do has some government involvement. If I apply for a credit card, what government rules are in effect, if I need a loan what is the fed doing with interest rates, If I want to buy a new car, what government programs are pushing what kind of car. The list goes on. I have a tendency to evaluate most of this by looking at my son and asking how much is he expected to know in his daily life. He works 9 hours a day at his job, throw in another hour or two of commute and 8 hours of sleep. Of the remaining ~5 hours he needs to handle his kids, do his chores and keep up with the government. Of those, keeping up with the government is likely to get shortchanged. An unfortunate fact of life. Especially since you can’t even just watch the news anymore, you must hear both sides to get any reasonable interpretation of what’s happening.

Sorry, I’m not going off on you, it’s just too much. And is the prime reason we have a tendency to make decisions based on sound bites or talking points. Just had to get that off my chest.

@Jaxk I know it isn’t simple, but the guy who works day in and day out on a payroll never catches a break. Fine, if it is so important to you to protect a business, make that it must be held 5 years. Or, keep it as it is, and let the first $500k be taxed at the lower and after that at a higher rate, anything that would be a move in the right direction. People in the lower middle class who never ever get a shot at the loopholes the rich use is just not right. You have to have some discretionary income to invest if you don’t own your own business as an investment. If someone sells their business for $1million or more, it was probably throwing off a nice profit year after year, I hope that guy was managing his money and not relying only on selling the business to have some financial security in retirement. Capital gains is used by people who flip houses, long term holds on stocks, all sort of things, not just the guy who has been working a business his whole life.

And, honestly, the guy making $200k isn’t living check to check in most of the country (NYC, DC, San Fran different story) even he can afford more taxes. I think Obama should have never have made that deal and protected the rich, he should have let all the Bush tax cuts expire. The people really suffering right now, are the people who always are (working poor, lower middle class) and those out of work, the middle middle and higher are doing fine, as long as they didn’t do something very unwise with their money, but that can ahppen even if they pay half the taxes they pay today.

@JLeslie

I fear you may be a little short sighted on how a small business works. Hell you could have a small business worth a million with no profit what so ever. A lot of the value is based on the assets. If your scrimping to keep your business running, you are likely paying off or buying assets to do so. When you sell, the money you have invested in that business is what you’ve got. And not only has the government taxed you on every dime before you invested it but they want to tax you again when you sell it. Now you want to raise that tax because you think they are so damned rich. The guy running the dry cleaning store has probably invested a lot of money in the equipment to do so. His business is valued on those assets. Most small businesses are not making a lot of money to invest outside of the business. It all goes back into the business.

Most small businesses fail in the first three years (about 75%). That doesn’t happen because they are making money hand over fist.

@Jaxk I have a relative who owns a sub shop. His taxes are unbelievably low, all done on the up and up. He earns I nice living from that business. The downside is his social security will probably be very little, because in the end his taxable income is quite low, but he has been able to keep a lot of money in his pocket over the years. When he sells he will be able to write off improvements he made from the original price plus others. You only pay the difference, the gain on what your purchaes or put into building the business. Business owners who own the real estate that harbors their business has depreciation of the building, all sorts of stuff to help them with taxes.

@JLeslie

It all sounds good when it’s someone else. The problem is that all that stuff you invest, gets depreciated over time. So that when you sell, the purchase value is nil. If your relative is doing great, I applaud them. I also suspect you think he’s doing better than he actually is. It took me many years to get started with my business. During that time I looked through hundreds and hundreds of financial statements. Most people that run a small business don’t make much more than the people that work for them. It just looks like they do. Many people buy a small business simply to have a job where they are their own boss. It’s a way to live frugally while investing for the future (the business is the investment). Sometimes the business takes off and the owner does quite well. That’s not the bulk of them though.

@Jaxk I don’t know what you are talking about. My relative makes $50k to $70k a year, but his taxable income winds up to be much less. Much much less than if that was me working for an employer. He is not rich, not close. My household income is much higher. I am the one that has plenty of discretionary income, not my relative. He takes advantage of tax benefits of owning a business, and I can buy investment property if I feel like it, write off the taxes we pay on the Porsches my husband buys, hold onto investments for long term gains if I want. I am not just picking on people with money, or all people who own businesses, or anyone specific. I just want to pay off the national debt, and I want people to stop thinking that taxing me or someone making much more money than me a little more is going to stop their spending, because that is ridiculous. I have plenty of savings going into my bank account, if I saved a little less its ok. And, I am not in that over $250k bracket.

I am not going after the tax breaks for him as a small business owner. But, he is a really small business owner. Small business is defined in most industries as <500 employees. That is not so small to me.

I wonder, are you a business owner? Is most of your income capital gains? Are you up above the $250k mark?

@Jaxk “I think you’re more critical of the average American than I am.”
I think you underestimate my cynicism :D
Seriously though, I have an odd way of showing that I care.

The fact that we have a tax code that even those in charge of administering it don’t understand it at least has the side benefit of creating many thousands of jobs. I mean, if the average citizen could understand even half of it, how many people would not have jobs? HR Block would lose a lot of business, many accountants and lawyers would have to find either new specialties or new career fields… simplifying the tax code would hurt America!

“I have a tendency to evaluate most of this by looking at my son and asking how much is he expected to know in his daily life…”
The way I see it, I have about that much free time myself yet I manage to keep at least somewhat abreast of things; moreso than someone who just watches Fox or The Daily Show and bobs their head in unison with the rabble-rouser on the screen. (Of the two, I trust the latter more since they don’t try to pass themselves off as serious journalism.) So either the average American is intellectually deficient (not stupid, just lazy and/or inattentive and/or undisciplined) or you and I are gawds for our ability to think critically. That means that I alternate between harshly critical and overly smug.
So, do we want to light fires under some people’s asses to bring them up to speed, or do you want to just stroke my ego?

@JLeslie If you think that $60K (+/-$10k) isn’t rich then let us not forget that that is still well above the median. In fact, that is better than the median household income; not bad considering how many households are dual-income. Of course, that leads into a whole discussion about, “What is rich?” along with digressions about perceptions of wealth (40% of millionaires feel they are not rich) and median income versus the cost of living…

@jerv I’m pretty sure I once asked a question regarding what the collective defines as Rich or wealthy, can’t remember. I think we are agreeing? Or, maybe I misunderstood what you just wrote to me? I think having a million dollars in wealth is not rich. For me someone would have to be up at $3 million or more I think.

@jerv @Jaxk There is a difference between the discussion of whether it is fair to tax wealthy people at a higher percent, and whether it really negatively impacts the economy and business growth. We have had times of much higher taxes and much higher growth.

@jerv Here is the definition of rich question. I think you will find it interesting.

@JLeslie Thanks for that link. And I think that that kind of plays into any “Tax the rich” argument. For purposes of this discussion though, I think it safe to say that the vast majority of people are not even close to rich, and many are drifting further away from even middle-class, most of them in a downwards direction.

I will say that if you can afford a stale bread crust when most others around you cannot, you are relatively rich even if you only have a penny though. I also think that anyone who has more wealth than I have earned in income in the last two decades is wealthy.

@jerv I agree.

@jerv

I was 24 before my annual income broke 5 digits (just barely). By the time I was 50 my annual income was easily more than the total of all of my 20s and 30s. And I didn’t consider myself rich (I’ll give you ‘comfortable’). Yes everything is relative.

And if we lost all the accountants, IRS agents, and tax attorneys (or all attorneys) how much would we lose? They produce nothing. It’s like having a group of people dig holes and then another coming behind to fill them in. Yes, they have jobs but produce nothing of value. They are a drain on the economy not a benefit to it. How’s that for cynical?

@Jaxk If you want to go flat income tax I am up for it, no loopholes and write offs, get rid of those tax accountants doing personal returns. Well, they would still exist, but probably fewer of them.

@JLeslie

Ah hah, at last something we can agree on. To be honest, I would prefer a consumption tax (national sales tax) but either way would be better than we have now. Tax consumption rather than productivity. And it has the added benefit of completely eliminating the IRS. Whoopee. But as I said either way it becomes much simpler. Hell, even Geithner could figure out his taxes.

@Jaxk If we had enough jobs to keep them as productive taxpayers as opposed to unemployed sucklers of the government teat, I would agree with you. I mean, the kid working the fryolator at BK contributes more to society than those people.
The catch here is that society needs some major reforms and some drastic changes, but the transition…. well, “rough” might be an understatement.

@JLeslie I think you may be interested in this It is about tax reform and how a flat tax would be a real problem since there really is no acceptable balance of exemption level and tax rate that would allow such a system to stick.

@jerv

Yes, here’s the problem:

“Finding a rate and an exemption that fully satisfied every political requirement proved to be impossible”.

You can’t please everyone. Any tax plan that tries to please everyone is doomed to failure. Hell look at the existing tax debate, we’re not pleasing everyone by a long shot. And when you have almost 50% of the population paying no tax and many of them actually getting a check from the government, you have an untenable position. That’s why we keep compounding our problem by complicating the tax code. There are over 70,000 pages in the tax code, this might be a bit much. We have 1.2 million individual tax preparers. There are almost 600 different tax forms for filing taxes. It’s got to be time to stop this insanity.

@Jaxk I think my buddy has a great idea when he says that any law that can’t fit on a single piece of letter-sized paper in a 9-point font should not even be considered by any legislative body.

@jerv

I would agree with that rule. I would also add that congress can only pass legislation on even numbered years. On the odd numbered years they must repeal existing legislation. Just a way to cut down on the ‘Scope Creep’.

@Jaxk I would never agree with a consumption only tax, the rich would get away with murder in that scenerio. Huge portions of their “income” would not be taxed, and every penny of the poor, lower middle, and middle middle class basically would be. If you are ok with the rich paying much much less as a percent of their income, then we might as well stop here, because I find it so very wrong. If you think they will still be paying equal or more than the poor as a percent, then your math is so very screwed up, or you really have no idea how the rich spend their money and save it. But, I am not making assumptions about you, this is just things I here from other sales tax only oriented people.

@jerv I need to study your link, I’ll get back to you.

Here is Timothy Geithner’s answer Yahoo News

@plethora Here comes the zombie argument about Income Taxes yet again. Problems with this Yahoo Answers post. The fact it’s a Yahoo Answers post means it almost certainly was not written by Timothy Geithner. “According to the date” is not a reliable source. Nor is “according to private and government data” a reliable or even verifiable source.

The classic Republican volley in their war on the middle and working class is to note that the top 10% pay the lion’s share of Federal Income Taxes. This is true only because very few in the bottom 90% are even subject to Federal Income Taxes, per say. They pay plenty in other federal taxes, but those aren’t named Federal Income Taxes. The GOP can make this claim in service of their rich masters. But it is only by the sophistry of calling all taxes other than one specific tax that rarely applies to middle-class workers (Their withholding tax covers it) something other than taxes.

Let’s look at some of the other sophistry this author uses. “On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data.” Well, of course they do. They make most of the money, so they pay more in taxes than the bottom tier. This would be true even of the Greedy Oligarch Party’s wet dream of a consumption (sales) tax were in place. The rich would make out like bandits. But even so, those that make a lot more would still pay more than those that make just a little. What does the GOP want, a reverse tax where the rate keeps going up as you earn less? No need to answer that. I know they want it. They just haven’t worked out the sophistry yet to make it sound fair.

Again, from the “Timothy Geithner” post, “They pay at a higher rate… “Absolutely false unless we again apply the :Income Tax” naming sophistry. For example, a typical college graduate with a good mid-level corporate job can expect to earn around $2.4 million in a 40 year career. The top hedge fund manager on Wall Street earns $2.4 million an hour. The college grad is taxed at 35%. The hedge fund manager is taxed at 15%. Fair> I certainly don’t see how it is. Also, state, local, sales and other taxes take a much larger percentage of the middle-class earner’s income than of the billionaire.

The 400 families with the top earnings on their IRS filings last year own more financial wealth than the bottom 50% of the entire US population. That’s 400 families with more money than 160,000,000 Americans. And the GOP is determined to transfer even more to those who are the wealthiest already. They are grateful, and donate generously to Greed Oligarch Party causes. Is it any wonder why?

@ETpro So are you saying class warfare is a fact in our homeland these days? I had no idea. Good thing Im up this hour.

The classic Republican volley in their war on the middle and working class

@JLeslie

Obviously you don’t understand how a consumption tax works. Or maybe you’re just making absolute arguments for effect, I don’t know. Either way my math is not screwed up and I have a fairly clear picture of how the rich spend thier money. And spend it they do.

@Jaxk As it stands, many of the things that the rich do with their money result in a tax deferment, exemption, or write-off. And their spending habits may change depending on the exact definition of “consumption”. Also, I would like to know what percentage of their income actually is spent rather than invested or saved. Without that number, it’s difficult to think contrary to common sense and simple math.

@Jaxk Ok, why don’t you explain to me how the rich are going to spend all of their money they earn, while the middle class and poor only will spend a part of what they earn.

Seriously think about it. The middle class guy is barely saving, so the money he spends, every bit is taxed with a consumtpion tax, which equates to every bit of his income is taxed through the consumption tax.

The wealthy guy only spends a portion of his income, and saves the rest. Which means only the percentage of his income he spends is taxed, the rest of his incoe is tax free.

@JLeslie

It’s difficult to get interested in a debate with someone that uses absolutes for thier arguments. They obviously are either not interested in hearing the arguments or are simply not well informed. Every consumption tax proposed (at least any I’ve seen) have non-taxable essentials, Food and things like that are exempt as they are with most state sales taxes.

You seem to believe that the rich are vastly different than normal people. Whereas that may be true for some small subset, it not true as a general rule. Half of the people that make it into the top 1% of income earners, make it only once in their life. Even the top 400 only 27% of them make the list more than once. Most of these people are one time wonders. They have sold a business or had some sort of windfall (maybe won the lottery) to make that income. They use it for retirement where they spend thier money on a comfortable living. But spend it they do.

Even money left thier heirs is distributed and eventually spent. The top of the income ladder is a churning list. The kind of list that gives hope to even the lowliest of us on the ladder to success.

@Jaxk Probably about 30% of my friends have no debt. Zero. No mortgage, no car payment, credit cards paid in full every month. They save money every year. Why? Because they make pretty good money. $150+. That is not rich. Sure with your example it is not 100% of income, because as you pointed out groceries and some other things will be excluded. Those things will be excluded for everyone at all levels, so that is a wash. If I save $50k every year, and the guy next to me makes only $50k a year, I got away with paying way less tax than him as a percent on my income.

If you are wealthy, never have to work again, then maybe you can make your argument, because only new income is taxed as we are set up now, although that includes interest income. If you, and I mean you personally, make a great salary, let’s say $150+ and you are not saving a nice bit of money at the end of the year, spending it all, which seems to be what you are arguing for, how will you ever be wealthy or maintain your rich status? Good luck with that.

@plethora Oh yea, class warfare s very real. THe middle class has been under attack by the wealthy class (or at least by a group of billionaires like the Koch Brothers and the Waltons) for 30 years. They are slowly being eliminated.

@ETpro In your scenario. Perhaps you and I should do a radio show together. I think we both rant well enough to draw a following from one end of the political spectrum to the other.

@plethora Get Clear Channel to sign us up. I’d love to froth at the mouth at you, then go out to buy you a beer when we’re done. :-)