My point may have been too subtle. My fault (really).
I was highlighting the political problem. If you are going to classify the folks in the 90th to 99th percentiles are rich, that is going to surprise millions of folks, because you know, self identification is the only identification that matters to the self.
My own wife seems to be quite puzzled by the idea that when we talk about soaking the rich, we are going to get at least a little damp. There are millions like us, and tens of millions in just the next tier down ($150k-$250k) where you need to go to get serious money.
Actually, you pretty much do have to. The deficit projections for the next 10 years is ~ $7T dollars. Pay off the $1.3T and you still have $5.7T to deal with. If we’re talking about paying this off in 10 years, that’s $700B/year you need to raise. Same order of magnitude problem, amigo.
And if you think the government is using pessimistic scenarios to give us those projections, and it’s actually going to turn out better, then I have a bridge you might be interested in buying.
You said 150k, not 250k. I agree that the difference is significant. That’s kind of my point. The rate has to go up on income BETWEEN 150 and 250. If you raise the rate by 10 percentage points. You get an additional 10k from everyone over 250. If you raise the rates over 250 you get much much less.
Well sure, every little bit helps. My point was that the largest taxable quantity of money was towards the lower end of the spectrum. Politicians are aware of this, and that’s why they allow tax loopholes for the wealthy. The government needs money and realistically speaking if you want money, you have to go to where it is. Campaign contributions and whatnot buy a politician more than the slight amount of tax money which could be added to their yearly budget.
I would be skeptical of level of surprise you are describing. Anyone who has been listening for the past few years would have heard the $250,000 number frequently cited. And I would also point out that we are talking about marginal rates - a higher rate on the dollars earned above the cutoff (whatever it is) - not on every dollar for those making above a certain amount.
That is why I am saying that raising the rate on the amount just over 250k would barely touch us financially. If you raised the rate on the amount over 150k, the impact would be significant. But of course that means that someone making only 160k is going to take a small hit. And then the politics gets more difficult.
Though I will throw this out. If you really raised the marginal rate over 150 by 10%, my wife would quit her job. We only get 30% of her income after taxes, childcare, commuting, etc. Drop that to 21% and it would not be worth the aggravation. So the taxes we pay would go way down. Someone else might take her job, but the job was open for eight months when she was hired, and of course a nanny would be out of work. The nanny doesn’t pay income tax, but we do pay 15.3% in payroll taxes. If the nanny’s husband finds a job, then she will pay income tax as well.
It’s just one data point, but should illustrate that this is not simple. To balance the budget we need massive tax increases. If spending cuts are off the table, it looks just as impossible as if tax increases are off the table.
You’re not accomplishing anything if you’re raising taxes on the same people that you’re spending the stimulus on. But that would be silly, which is why nobody but the likes of Herman Cain suggest it. But you might accomplish quite a lot if those two policies are in different places: Raising taxes on the rich would have very little anti-stimulative effect, far less than the stimulative effect of hiring the currently unemployed.
I think part of the problem is people are confusing wealth and income. A small business person that takes in $1 million but has to pay out $900k in expenses isn’t part of the problem; That money stays in the economy. But some millionaire heiress that “earns” $1million a year off investments is going to buy whatever rich people do, and what’s left goes back into investments. These people are only collecting wealth because they already have so much to begin with. Wealth = assets - liabilities. Income doesn’t need to be redistributed, wealth does. The wealthest 20% own 84% of U.S. wealth. The next 20% own 11%, the next 20% own 4%. One figure you hear thrown around is how “half of the population doesn’t even pay income taxes”. Well yes, but that might be because the bottom 40% of Americans own a whole whopping 0.3% of America’s wealth.
I don’t understand how some people have the mentality that “anyone that works hard can become wealthy”. How?? There is only a finite amount of money/wealth/resources out there… if someone has more then someone else has to have less. How about we let everyone keep whatever they earn in their lifetime… but when you die, you’re money gets put back in the pot. Bring back the estate tax.
If you are interested in how we got here. If you want to fix it, I would suggest reversing these policies as fast as possible. It will take time to fix this mess, but the sooner the better.
That’s not taxing their wealth, it’s taxing their income based upon their wealth. If 99.9% of the wealthy’s financial standing is tied up in wealth and only 0.1% in income, you aren’t touching any of the wealth, just their income. As pointed out, if you’re trying to raise money, taxing the wealthy on their income doesn’t have a particularly big return so far as the government is concerned. There’s not a lot of money there.
If the purpose of a stimulus is to fight unemployment, then arguments that job-creators aren’t worth bothering with sounds a bit questionable. Where does real employment come from except from job creators?
You could make an argument that the poor are fairly likely to not be very good at managing their money. As such, given money, they’ll go out and start spending it foolishly, instead of being careful with it and putting it into savings. You’ll have rising demand, and people will start to be hired back. But where is that money going to be spent? Not in growth markets. A lot of it will go to Budweiser, gambling, McDonald’s, guns, stereo systems, General Motors, etc. So say that McDonald’s picks up some extra demand. They expand a little bit, hire more low-wage workers on, and end the high unemployment. Now the stimulus to the poor ends, they stop eating so many hamburgers, and McDonald’s lays off all of those people. You’re back to where you started.
On the other side, say that you don’t tax the wealthy and they invest in hydrogen fuel for cars. These companies hire on low wage workers to be their janitors, to build new hydrogen pumps in factories and install them, etc. As the product hits the market, it seems like a profitable venture, meaning that the company has to grow. Now the stimulus ends, it doesn’t matter much. The company has a new product, viable in the market place, not reliant on stimulus money, and wants to grow. Every new market they go into, they’re going to take whoever they can get from the unemployment bureau and put them to work, because they want to grow and that’s how you do it.
Looking at that census cite, it is not clear to me how they are defining income. In fact, it looks to me like they are not defining capital gains as income, which is where most wealthy people get their money.
In short, I think you are wrong Sage Rat, but I don’t have them time and energy on a Thursday night to prove it… I think where you are wrong is that you are ignoring capital gains and qualified dividends which are treated differently than income by the US Government (which is where the data is coming from) and taxed at a much lower rate.
Anybody have any bandwidth to address this? I am sorry I am so lame but I already worked 13 hours today and am beat…
If you want to refute anything I posted, refute it. Don’t post some link without a quote and expect me or others to do your homework for you. As it stands, you got nothing.
You still don’t understand how property tax works.
If I have a $10M house and a $100k/yr income, I’m screwed because I’d owe $150k in property tax every year. The county doesn’t care what my income is, or where I get the money. They’ll eventually force me to sell the house if I can’t pay the tax.
Well obviously the job creators aren’t stimulated enough to do what they should. We still have too many unemployed people. So those job creators need to start created more jobs. I say we motivate them by confiscating ninety percent of their wealth. That’ll get them up off their asses and out their job creating their way back to being rich.
Everyone benefits. We get to pay off the deficit which everyone agrees is a good thing when there’s a Democrat in the White House. We all know that wealthy people achieved their wealth by their own efforts so they’ll have no problem becoming wealthy again. And we all know that the way wealthy people become wealthy is a process of job creation, so these wealthy people will create oodles of new jobs as part of regaining their wealth.
See, we just need to apply the fundamental truths we’ve learned on Fox News.
Well of course employment comes from job creators. I’m not talking about taxing job creators; I’m talking about taxing the rich. What in the world gave you the idea that job creators have anything to do with the rich?