How many Americans would vote for a maximum tax of 33%

In My Humble Opinion
21

You are either lying, committing tax fraud, omitting information or miscounting your total tax burden.

The effective Federal Income Tax before any deductions on $120,000 annual salary is 23%

From here: http://www.irs.gov/formspubs/article/0,,id=164272,00.html

Your tax burden would be $15,698.75 + 28% * ($120,000 - $77,100) = $27,710.75.

The D.C. tax schedule shown here: Bankrate: Guiding you through life's financial journey

Gives us a state tax burden of $10,000 * .04 + $30,000 * .06 + $80,000 * .085 = $9,000.

Your Social Security Tax would be 6.2% of $94,200 = $5,840.40

Your Medicare Tax would be 1.45% of $120,000 = $1,740

**This is a total tax burden of $44,291.15. That is a tax rate 36.9%. **

You claim to be paying $28,800 in taxes. In order for you to have enough deductions to bring your Federal Income Tax to the $12,219.60 that you are claiming you would have to have $56,800 in deductions to get your AGI to $63,200.

If you own a home you would be adding Property Tax onto that amount at 0.85% of the value of the home. With a Median Condo value in DC of $397,000 that would be a median Property Tax of $3,374.50 or an additional 2.8% of your Income.

If you buy things you will be adding a Sales Tax ranging from 5.75% to 14.5% of the purchase price depending on what you are buying in DC. Let’s consider you to be a extremely frugal shut-in and your consumer expenditures to be $50,000 and the average sales tax of about 7% which means you’ll be adding an additional $3,500 in taxes per year or about 3% of your Income. Go here if you want to find the averages in more detail and break out the tax rates by segment.

I think you should think twice before questioning anyone’s math.

22

Look at the bright side. Maybe they used your taxes so some neocons could demonstrate their toughess.

23

As to the OP, I think the whole concept is misguided. We shouldn’t tie the budget in to any specific tax rate. We should instead figure out how much we want the government to spend and then collect taxes for that figure. Hopefully it will be a lower rate. If necessary, it might be a higher rate. But creating a fixed rate basically encourages the government to spend that amount.

24

You seem to have a cap confused with a floor.

Believe it or not, I was going to add that to my original bitch and missed the edit window. Consider it added.

25

Not in 33 of the 50 states plus DC. In those states the tax burden is less than the national average, which is still less than 33%.

Once again, would anyone like to change their vote?

26

I don’t understand. Right now, individuals pay some percentage of their income in taxes, ranging from zero to 50+%.

If there were a cap, they would be paying anywhere from zero to 33% (or whatever). A cap isn’t a flat tax. It doesn’t mean that everybody pays that percentage, only that nobody pays more.

27

Ding, ding, ding - we have a winner!

28

My inner Republican could kind of dance to this… let’s see…

a) First order of business: can our government afford this? Is this going to constitute an overall income reduction for the government as a whole, or can the government as a whole break even (or, better yet, even bring in more total $) via getting rid of various deductions and exclusions and whatnot?

b) If the answer to question A above is not “no” (which would be a dealbreaker), this change would presumably constitute a shift in where the taxes come from. I’d want to know more about that shift. I don’t want the lower middle class and below to be picking up the slack, nor do I want it all shifted to the corporate sector if the net effect is going to be a wet blanket on business in America. I think it could be done in such a way as to shift the burden to the quite wealthy indivs and a portion of the corporate sector, those being the indivs and corporations that current manage to pay considerably less than 33% of their real pre-tax income. Year before last I used TurboTax and answered to the best of my layman’s knowledge and paid a painful extra few thou on top of what the Fed and State had already withheld. Last year I went to an accountant and under very similar circumstances got even more of that returned to me as a rebate. Obviously the tax game can be played.

c) I have no objection to reducing governmental spending if the reduction can take the form of gutting waste, eliminating horrible inefficiency, and doing more with less money. But I do not want a reduction in government services. I want more services in fact.
Within those constraints and with those concerns taken into account, hell yeah, cap it as low as it can be capped without killing the profit machine of our economy, making the working & midclass into wage slaves, or chopping services.

29

It would be very close to a flat tax. The cap would dramatically flatten the progressiveness of our tax system and greatly increase the burden on the poor and lower-middle class.

If the current average is about 31% then all the money collected from people paying way over 33% would have to be distributed to those paying below 31%. That distribution is inequitable because those people paying below 31% (i.e. the poor) would be much more burdened by the tax than those carrying it now are.

People living in cities use more federal services and therefore the rural communities would be paying the way for those in the cities making more money and currently paying more in sales and property taxes.

Essentially every negative aspect of a Flat Tax proposal would apply to this proposal, with the added wrinkle that it would offer a incentive for the rich to buy things at the end of the year once they’ve capped out their tax payments. Christmases would be huge in the Rockefeller household. Not sure what the economic impact of that would be, but I think it would cause the consumers to by little in the first half of the year and a lot in the latter half as a rule.

30

And Omniscient nails the points I was trying (and failing to make)

  1. Capping the tax rate at 33% isn’t a bargain for most people, because they’re already paying less than that.

  2. Assuming the proposal is supposed to be revenue-neutral, people who pay less in taxes will have to make up the difference, which will make the tax structure regressive.

Thanks, Omniscient.

31

Last year, I owed the feds $50 and I got $65 back from city/state taxes. Pretty close to breaking even.

32

I would vote for a 33% cap in a heartbeat. For three reasons:

  1. It be be an immediate tax cut for me. The last time I did a calculation, my total tax burden was over 45% and that was a few years back. I would guess it’s over 50% now. That’s a purely selfish reason.

  2. I like the concept that was mentioned upthread that: when the money is gone, the governnment has to ask for more or stop spending. I know that idea is way too simple to put into practice and it doesn’t allow the government to deal with emergencies. But, I still like the idea.

  3. I am sick, sick, sick of people on this board and the politicians talking about tax cuts. What tax cuts? I heard politicians (George Bush as governer and president, Rick Perry as governer, and numerous local pols) claim they given me a tax cut when all they’ve done is stop or slow down the rate of the tax increases. I’m tired of tax appraisal districts raising appraised values faster than than the market value while they’ve left the rate alone and claim they’re not raising taxes. I’m tired of every state and county license fee tripling and the pols claiming they’re not raising taxes. I like the idea proposed here that everyone has to consider the combined total of taxes when they need to generate more revenue.

I don’t mind paying taxes, I’m not a libertarion. But, I’m tired of being insulted by the attitude that I should feel guilty because I’m not paying more or because I get angry when they ask for more.

33

I’d love to know how you are arriving at those numbers. I just did the math for Ravenman above and with his $120,000/year as a single filer puts him in a pretty high tax bracket and he only pays about 42% if you add in property and sales taxes. Assuming you are in the very highest tax bracket and earning $1,000,000 per year after deductions you’d only be paying about 32.9% in Federal Income Tax. Add in 10% in State and Payroll Taxes if you lived in DC, one of the highest taxed places to live in the US, and you only reach 43%. At a $1M in annual salary the proportional impact of Sales and Property taxes are smaller, so there’s little chance you exceed 46% unless you own several millions of dollars in real estate or spent a huge proportion of your income in sin-taxed consumables.

Incorrect assumptions like these are why the Republican lie of being for lower taxes and smaller government still works. They are for just as many taxes and just as much spending as Dems, they just want it to come from different places and be spent on different things. Having a 33% cap on tax would do no more to constrain government spending than what we have now. Our current tax code is capped! It’s just capped in a much more complex and nuanced manner than a 33% overall ceiling. The government has to pass a bill now to levy a new tax on anything. If we had a 33% cap they’d just have to pass different types of bills to either raise the 33% overall tax a point or two or raise the way that people beneath the cap are taxed which would make the tax even closer to a flat tax. Nothing in this discussion would limit government spending any more than it’s limited now.

Right now when the government needs more money than they are getting from tax they borrow it and increase the debt, something Republicans are notorious for, and people fail to realize that this is essentially a tax on future generations. The only other way a government can raise money without passing a law is to raise our GDP which by definition raises overall tax income because we are all richer.

This is finally something that I agree with. All the talk about “tax cuts” are bullshit. The Bush era’s refund checks over the past year aren’t really rebates. They are money borrowed for a quick fix now at a higher cost later. Every one of those $600 checks we got will probably cost us $900 down the road. But, you have to understand that most of the “tax hikes” that are talked about are equally bullshit. What they all are are simply a redistribution of the tax burden from one person to another person.

You highlight another very salient point regarding the concept of a “Tax Cap”. If we were to have a tax cap, the government would simply relabel things as “fees” or “fines” or “service charges”. In this way they’d be able to hide from the political fallout from raising taxes. If the city can’t pull in extra money by raising property taxes it’ll start costing you thousands of dollars for water and sewer. Parking fees and tolls would skyrocket. If they are getting shafted on sales taxes because people are “at the cap” then you’re going to see business taxes going up and commercial business licenses increasing exponentially in cost. If you wanted to add-on to your home and increase it’s square-footage (with no tax risk since your property tax is at the cap) then the city would start charging you tens of thousands of dollars in inspections and permits.

There’s essentially no benefit to a tax cap like that except to redistribute the manner in which taxes are collected to favor the very, very rich and to create a much less transparent way for the government to collect money to function.

34

Building a road for seven people is a great example of why many people think we could live with lower taxes.

35

Seriously, can we say “bridge to nowhere”? Though, I’m not sure stupid allocations like that justify lower taxes so much as more accountability on spending.

36

Our tax system isn’t terribly progressive now. With the cap on SSI taxes, the ability of the rich not to pay nearly as much in sales taxes as the poor because they can afford to save, the rich getting significant capital gains income at a lower tax rate, etc., taxes are not nearly as progressive as most people believe… Warren Buffet has said he and his receptionist have about the same proportional tax burden…

I say this as someone - as far as tax policy goes - generally qualifies as rich (certainly to Obama) - and someone who frankly doesn’t find that terribly fair. My overall tax burden is somewhat below 30% (estimated, including sales tax, property tax, etc) and I’m in the fairly high tax Minnesota.

37

I guess you are going to have to define “terribly progressive”. Capital Gains Taxes and Social Security are somewhat special cases. Warren Buffet isn’t an ideal comparison because such a huge proportion of his income is from Capital Gains where for most people that income pales in comparison to their regular taxable income. With a income tax rate of 35% on people earning over $350,000 and 15% on the poor earning between $8 and $32,000 seems reasonably progressive for most families. Especially since property taxes and sales taxes tend to be progressive before you reach the extreme ends of the spectrum.

Now, I agree that there are many ways in which the system could be improved and that there are certain aspects in which it could be progressive in a more effective manner. But you are cherry picking the exception that is Warren Buffet in this respect. Most millionaires are taxed at a much higher rate than their receptionists.

Once again I’m going to question your numbers on the “less than 30% tax rate”. “The considered rich by Obama” statement I’m guessing implies that you are in the range of more than $250,000 that has been discussed in all the debates. If your household earns that much you’d be in the same ballpark as Ravenman’s 37% before sales and property taxes. You’d have to have some serious deductions and tax credits to get under 30%.

38

The thing is, that if you make $350,000 a year in earned income, and you aren’t getting significant income from capital gains (not in this market, but in a normal one) you are an idiot. Very few people who make a lot of money make it in earned income.

Last year I figured it and it was about 27% - capital gains, earned income, low property taxes (we live in a small house) - but it was an extraordinary capital gains year for us, if I recall - plus investments in tax delayed income (401ks, deferred comp accounts - we earned it last year - we won’t pay taxes on it for many years).

39

Sorry to be pedantic here, but “significant income” is a pretty loose term. Let’s suppose you have a annual salary of $350,000. Assuming you are well diversified you can probably count on a growth of something like 10% in a good market.

Now, day traders and people that strike gold on some penny stock might put up big numbers, but that’s not the norm. Regardless, it doesn’t matter because short term gains are taxed at your ordinary tax rate anyways. If you hit the jackpot your tax rate will be about the same.

In order to offset that 35% income tax rate on $350,000 dramatically you’d have to be getting a huge return on a huge amount. With a capital gains tax rate of 15% you’d have to have gains of approximately $350,000 per year in order to reduce that 35% tax rate to 25%. With 10% growth that means you’d have to have a investment portfolio worth $3.5M. Even earning $350,000 that’d take a long time to achieve.

You must have had an exceptional year or have an investment portfolio large enough to produce capital gains that almost doubled your annual income. That’s a pretty damned uncommon situation I think.

40

Most of the reduction is because we defer taxes as much as we possibly can. That means our money isn’t terribly accessible now - its tied up in trusts and 401ks and deferred comp accounts, and we will pay taxes on it later, but it is our money, and in the future, we won’t make the same sort of income.

The thing is, it isn’t a 35% income tax rate - its a federal effective tax rate of - in our case - 24% on AGI - lower the AGI and its lower. We lower our AGI by deferring taxes (and some deductions - though we don’t have a lot of deductions). We also pay capital gains tax - long term - on some of our income - and have interest and dividend and STCGs income as well - and while we pay our income tax rate on that (24 + state taxes) - we aren’t paying any Social Security taxes on any of that.

This isn’t that uncommon - I used to do taxes for a living.

Now, its completely possibly that by the time we pay taxes on all that deferred income, we will end up paying more in taxes… but never pay taxes today you can put off 'til tomorrow.