juliabliss;It’s cute that you still believe that wealth is determined strictly by “hard work” and “brains”…snip…
It’s even more adorable that you didn’t read carefully enough to figure out who you are disagreeing with:smack:
(Hint: I’m on your side of the argument)
Terr, if one takes the premise that people get wealthy because of hard work, brains, productivity, etc., then they should remain wealthy by continuing to work hard, being smart, and being productive. The tax code absolutely should not be keeping them wealthy: They should be doing that themselves. If the tax code is set up to keep them wealthy, then that’s just a government handout.
I didn’t say the tax code should “be keeping them wealthy”. I said the tax code should not prevent them from continuing to be wealthy. That’s not the goal of the tax code.
Looking at 1956 I see the marginal tax rate for money over $400,000 is 91%. Is the data on this website incorrect?
Do you know the difference between “marginal tax rate” and “effective tax rate”?
But feel free to demonstrate that they are “an extreme minority”.
I think that’s wonderful. My mother had her husband leave her with 3 kids to support and little work experience to help land a job. She was eventually able to buy her own house and is doing OK. I have two brothers, we all have bachelors degrees and have survived. Thrived in some ways, not in others … cycle of life.
I’m looking at the future. You are describing adults who are already out of college, I am looking at the teenagers in high school right now.
I look at my son’s options and think back to how things were when I was his age and it is amazing how times have changed. My mother was able to take for granted that with decent grades her kids could go to college with grants and some student loan debt. The costs have skyrocketed so much that even with savings and good grades it’s hard to say if that will work out for my son. Even then, there’s a few baristas wondering about the cost/benefit ratio of college these days.
I see it as a tax specialist, business owner, taxpayer and a parent. Things are different than they used to be, and a key reason things are different is that there are less “community funds” to go around. That, in an extremely broad sense, is what tax dollars are for. Today’s public debts and lack of infrastructure are a direct result of efforts from those that don’t need a village to help them out to lower their own tax rates so that they don’t have to worry about mixing with those village people.
Taxes come down to nitty-gritty details, and you asked for them, so here you go:
Back in 1944, the top tax bracket was 94%. This DOES NOT MEAN the wealthy gave up 94% of their income to the IRS. This applied to taxable income (after all deductions and exemptions) above $2.6M for a married couple in today’s dollars.
Back then, everyone paid more taxes. The lowest tax rate (again, after all deductions and exemptions) was 23%.
The 90%+ tax brackets were gone in 1964 and the highest bracket then was 77%, on the top $2.9M. Now we are down to 39.6% on the top $450K:
NOTE these are “earned income” tax brackets. The top investment rate has been 15% since 1994 for everyone, not 39.6%. I will say the AMT mitigates that issue a little bit, albeit with a whole ton of other headaches.
$450K isn’t an amazingly huge amount of income for a married couple, if they are both professionals in a metropolitan area. It’s those folks and everyone below that level that get screwed by the uber-wealthy with our current system. Mitt Romney pays so little in tax because the vast majority of his income is already above $450K so the effective rate gets smaller and smaller as income goes up.
These are all inflation-adjusted figures BTW. The ultra-wealthy have been screwing the well-off, the comfortable and the working class for decades.
Here is a handy chart of EFFECTIVE tax rates over the years. This is the straight taxes/income calculation. You can see that rates are slightly up for the working/middle class, about flat for the poor and well-off, and extremely lowered for the wealthy.
http://cdn.theatlantic.com/static/mt/assets/business/taxmageddon.png
The wealthy pay less in taxes when viewed as a percentage of income, by definition. If you don’t think that should be changed, then fine.
You know, I realized that upon the second reading and yeah, :smack:
There were a LOT more of “deductions and exemptions” back then.
Your own graph shows that this statement is wrong. The wealthier the segment, the more they pay in taxes when viewed as a percentage of income.
The entire tax system of calculations was different back then, Reagan really did re-write the whole tax code. So it’s not an apples-to-apples argument.
And that is what I get for doing this stuff while I’m supposed to be working. Here is the effective rate chart I meant to post:
The other chart explains why this is an easy issue to obscure. The brackets as given don’t take into account all of the income that isn’t even taxed in the first place.
That’s OK, sometimes I get lazy and don’t format stuff as clearly as I could:)
Then why cite the 90% marginal rate back then if the comparison is meaningless?
Your statement of “The wealthy pay less in taxes when viewed as a percentage of income, by definition.” is still wrong, with this chart or the previous one you gave. This new chart doesn’t even have other brackets for comparison. Try again.
This doesn’t really refute what juliabliss posted. She posted that most wealthy people are not self-made - they started as the children of wealthy parents. Your figures are showing what percentage of wealth was inherited vs earned in its owner’s lifetime. Which is a different issue.
Using your nine percent figure, you’re saying a person who has a hundred millions dollars started out by only inheriting nine million dollars. So it may be true that he earned ninety-one million dollars in his lifetime - but it’s also true that he probably couldn’t have done that without the initial nine million.
As an example, I googled what Bristol Palin made from Dancing with the Stars and per speaking engagement. She receives for a speaking engagement approx $14,000.
Now THAT falls squarely under the heading of “luck”!:eek:
She posted it with no cites whatsoever. So it doesn’t need refutation - it needs some kind of backing first.
Dividends are not deductible.
One of the types of double-taxation is taxation on capital gains. If you buy shares of a company, and though investing its (taxed) profits in itself it grows in value, the shares grow in value. The growth is reduced due to this taxation. When you sell the shares, the gain is taxed again. This is one of the arguments for using a lower tax rate for capital gains. (Another is that it encourages investment and reduces the effect of taxation on investment decisions, both of which are good for economic growth.)
I think there’s a good argument that corporations shouldn’t be taxed at all. Not so the rich get richer – the rich don’t pay the taxes on corporate income, the company’s customers do. I find that argument compelling, but I suspect we should have at least some corporate tax so that the US government benefits from US corporations that sell to overseas customers. (Perhaps their paying US employees would do enough of that, so maybe not.) The only strong argument I can think of for corporate income tax is to avoid people hiding their income as corporate income, and dodging taxes. (The company owner and president makes a modest salary; the company owns his house and car and buys his food and he lives like a sheik.)
Other than this loophole avoidance (which may not be necessary), I don’t think there’s much of an economic argument. It’s the political one that wins the day, people thinking that by taxing corporations, they’re shifting the tax burden to other people (when it actually doesn’t really do this – not much anyway.)
Not taking someone’s money would be a handout?
Gore lost my vote making the same claim in a debate. He said Bush would be “giving money to the rich” with his proposed tax cuts. Bush missed an opportunity to say “That’s just like a Liberal, to confuse ‘giving’ with ‘not taking.’” (Bush didn’t get my vote either; I wasted it on the other guy. My voting record is nothing to be proud of, in any case.)
The real problem isn’t that the rich pay too little taxes. The problem is that the middle class has withered away in the US. IMHO, this is not because rich are getting richer, but because the jobs are moving overseas (and the rich are still benefiting from those jobs). The real problem is the world economy, not the tax code.
The comment that I would like to add is this:
While I agree that-
we need income taxes to fund our government today;
progresseive taxation is the right (more fair, in the social justice sense) way to do it, up to a point;
-I find I often have issues language use in tax discussions.
I understand “progressive” to mean that taxes get “progressively” higher as income goes up. Many speakers (I believe intentionally) conflate the term with “progress” (and conflate the term "progress’ with “good”), to imply that the more progressive a tax code is, the better. And then they use the term “regressive” to describe a tax that is not as “progressive” as they like, as if to suggest that is was thought up by a knuckle-dragging caveman.
I personally feel that this is untrue, that there is some level of progressive taxation that is unfair, but I also feel that noone wants to figure that out.
I understand that for some people, they feel that we’re nowhere close to that point (of overtaxation of the wealthy), and they feel that this may justify disregarding this, but I will point out that this is a lazy attitude for people who proclaim to care about social justice to take with the people from whom they offer to take money.
This is what I think people are getting at when they point out that “The top 3 percent of filers, those making $100,000-plus, paid 40 percent of the taxes.”
Not less than poor people; less than in the past.
Powers &8^]
Here’s a good example: Let’s take a family of five earning $67,000 per year which is, according to the 2005 statistics is average. (the average income is a lot higher than the median income because the top earners skew it so much).
Now, let’s do their taxes!
First off, the family gets five personal exemptions at $3900 a piece. That’s $19,500 off their income right there: Now, their taxable income isn’t $67,000 but $47,500.
Let’s give them the standard deduction of $12,500. That puts their taxable rate at $35,000. At that, they pay 10% of the first $17,850 and 15% for everything above that.
So, they pay $1,785 for the first $17,850 and $2, 750 for the next $17,150 for a total tax bill of $4,535. This gives them an effective [i}]income tax rate* of 6.7%. If this family paid a mortgage, paid taxes to the local or state government, had childcare expense, etc., their income tax would be even lower.
By contrast, they pay 7.65% in FICA on the entire amount of $5,126.
The truth is that a majority of people who file pay little no income tax. Which is strange that many of these people support a flat tax which would require somewhere around a 20% tax rate in order to maintain the same tax income level for the U.S. Cain’s popular 9-9-9 proposal not only would raise the standard tax rate for the vast majority of families, but would also require a 9% sales tax and a 9% VAT.
“If this family paid a mortgage, paid taxes to the local or state government, had childcare expense, etc., their income tax would be even lower.”
IANAA, but I’m pretty sure this isn’t a given - if they claim mortgage interest deduction, they give up their standard deduction - pretty damned sure you don’t get to claim both. So the mortgage interested deduction may or may not reduce their total liability, no?