The Firefly Challenge: Prove 40% tax rate!

Great Debates
61

CK - I have no idea, now that you mention it (and now that I’ve gone back for a second look at the TF tables), whether they include corporate taxes or not.

I think that it was pretty revealing, in a bassackwards way, that the Tax Foundation published the tables without explanation or footnotes, which made it hard to tell exactly what they were doing if you didn’t know much to begin with.

It’s pretty clear to me that they put up these tables to convince the gullible with slanted numbers, rather than make a serious contribution to any sort of informed discussion.

No argument there. Although, precisely because of the 39.6% tax bracket, they really only pay 60% of the property tax, state income tax (if any), car tax (if any, now that my former guv has made abolishing car taxes a hot deal among state GOPs), etc.

Still, you’re right: the rich can get taxed above 40%. And, like you, I’d love to have the income to put me in that bracket; you’d never hear me complain either.

Melin - (1) property tax would be included if my example had been an owner, not a renter. Presumably, on your 4% property tax, you must have enough of an interest payment, along with that, so that you get to deduct an equivalent or larger amount off your income taxes.

(2) If someone’s paying rent, then someone else is paying the property taxes, and getting to deduct not only the interest, but depreciation as well. So not only is it not their tax, but the person whose tax it is, is doing pretty well.

When I was rowing up, my dad owned some small investment properties - a condo here and there. I remember how cool I thought it was when he showed me how you could be coming out ahead, cash-wise, and still losing money, as far as the IRS was concerned.

62

That should have been, “growing up”, of course. :slight_smile:

63

Um, so? First off, you are assuming that I am paying a mortgage rather than owning my home outright. As it happens, I am, but that’s not true of everyone even on my street.

Second, I’ve never understood the argument that says that it’s okay to spend money because “it’s deductible.” Again, so? If I’m paying an effective federal tax of 15% or so, that means I’m paying 85% of that property tax with after-tax dollars. (My property taxes are $5600, so that means I’m paying $4760, or about three and a half percent, of after tax income for property taxes). Plus, that $5600 is NOT deductible off of my state taxes.

I liked the image of you “rowing up,” BTW. :wink:

The regulations and such on deducting that type of investment income have changed considerably in the last twenty or so years, BTW.

-Melin

64

Hmmm.

I don’t have direct data on mean household income throughout the U.S. My Ibbotson data is broken down into percentages by ranges. a rough calculation came out at $60,300 but I don’t think that’s right.

I will redo this tomorrow, and see what I can come up with.

65

Tris, the government loves people like you. Affluent, idealistic, and SO accepting of Federal fiscal policy.

I am not so agreeable. I perhaps wouldn’t mind 30% taxation if the money were going towards helping our society and our world. It is not. More than 60% of U.S. tax dollars are wasted on counterproductive socialistic bureaucratic programs - none of which I have ever voted for.

You agree to tax cuts after lunch oblivious of the fact that several school districts around this nation have cut or eliminated their school lunch programs in the last couple of years. If I were you, I wouldn’t take such pride in being one of “the most affluent people in history” - affluence is nothing without priority, spirituality and community. We are losing all of this.

Yet to be reconciled with the reality of the dark for a moment, I go on wandering from dream to dream.

66

Melin:

True, but the odds were with me. (May the odds be with you, Luke. ;)) I don’t know what the percentage of homeowners is that own free and clear, but it’s very small. Between 30-year mortgages and the frequency with which people move, that’s not too surprising.

Whoa, there. I’m not talking about the okay-ness of spending because it’s deductible. I’m just trying to wrestle with the question of whether owning increases or decreases your total tax burden.

As you’ve pointed out, homeownership => property taxes, which increases your tax burden. But homeownership => Federal deductibility of interest and property taxes, and usually state income tax deductibility of interest, which decrease your tax burden. So, overall, are you paying less tax or more as a result of homeowning? This is the question.

Glad you liked the image of me ‘rowing up’.
If you catch Horsefeathers on AMC sometime, you can see me in a canoe! :wink:

67

Scylla - no problem; I can wait. Being lazy is one of my favorite occupations. :slight_smile:

Sake - you might’ve done better to read Tris’ post before responding. The point you make while excoriating him in your last paragraph was his very point as well.

And what is this epidemic of ‘the rulers/government love people like you’ slams? Personalizing the debate adds a lot of heat, but no light, and uses up whatever reservoir of goodwill the instigator has. :frowning:

68

Hang on, RT, let’s not allow any more distortion to creep into this than we can help… You ain’t in Horsefeathers. I think you’re confusing yourself with another individual, although I admit there is a certain physical resemblence.

Back on topic, my job often is involved with working with companies, trying to figure out executive compensation. I’m not allowed to laugh when these folks, more often than not being paid upwards of USD 500,000, crab about their tax bills.

69

Is there anything more convenient than the royal we, as in, “For now, it’s a worthwhile exercise to expose the folks who want to make us believe that we’re more heavily taxed than we are.”?

To gloat over proving the point that more than one-fourth — one-fourth! — of what a “typical family” earns is not their own is Neanderthal beyond belief.

Tris expresses a noble concern for those less fortunate who make less money. But what about those who are less fortunate in other ways? What about those who are homosexual and cannot marry, and therefore cannot enjoy the tax breaks that married with children people lavish in? What about those who are stuck in marginalism, who cannot afford to move to a cheaper state or city? What about those who could, though just barely, afford to give their children what they want for them, but cannot because they must pay the bureaucratic piper somewhere between 25% and 40% of what they earn?

Also, why are you ignoring the intangible taxes?

When you are taxed at five percent on the sale of an item, have you accounted for the many layers of taxes that are marked up in its sale price? I can’t see that you have.

If a widgit costs $100, what were the taxes involved in the mining of its raw material? What taxes were involved in its smelting and rolling? What taxes were added when its component parts were molded and formed? What taxes were compounded when these parts were assembled, when the widgit was warehoused? How much tax was levied in its transportation and on the retail store where we find it?

What about the taxes shouldered by the corporations, like FICA and FUTA, that are necessarily included in their costs and marked up each step along the way?

If you start with $1.00 and mark it up only twenty percent five times (conservatively representing five stages of production), you end up with $2.39, more than double the price. And if you have to mark it up twenty-five percent, in order to pay your taxes as part of the cost, then the sale price balloons to $4.21 — more than four times its true, marginal cost.

Before you go around exposing folks, you might want to look down and see if your own pants are zipped up first.

70

CK - Hey, it’s legal to change your name! Before being Rufus T. Firefly, I was Prof. Quincy Adams Wagstaff, president of Huxley College (you’ve gotta wonder why so many people are willing to employ me in diverse positions of responsibility!), and before that, I was Captain Spalding, the African explorer (did someone here say schnorrer?), hooray, hooray, hooray!

It’s wierd, hanging around rich people who gripe about how tough it is for them. A high-school classmate (and onetime good friend) became an anasthesiologist. (Even by medical standards, they’re near the top of the heap, salarywise.) But every time I saw her, she’d be complaining about the malpractice premiums. Needless to say, we lost touch with each other.

71

Nationwide houselhold income:

76% <$49,999
14% $50,000-$74999
6% $75,000-$99,999
3% 100,000-149,999
1% >$150,000

1998 #s

$53,000 is mean.

72

Lib, we disagree substantially on how society should work, and what constitutes a reasonable tax rate for what sort of services.

Still, here are the guys who are, in theory, on your side, arguing for lower tax rates. How are they doing it, though? They’re lying, that’s how. Doesn’t that steam you? Doesn’t it make you feel betrayed by the home team?

If you believe in the truth, rather than merely winning, you should get mad at them, not me.

Like these concerns are mutually exclusive.

And what about those who could, though just barely, afford to give their children what they want for them, but cannot because the industry has busted the unions out of existence, so they have no bargaining leverage, and their wages have treaded water while the CEO’s compensation is five times what it was in 1989, and the dividends keep skyrocketing?

Look, let’s debate all this somewhere else, if you want. There’s plenty of bandwidth for another thread. I agreed with Tris as quickly as possible, then said further discussion belonged elsewhere. And I’m going to say it to you too.

OK, this is on topic, but I’ve already dealt with it: in the OP; in a response to you on 2/8; in a more complete rebuttal to The Ryan on 2/9.

The gist: (1) If I add in all the taxes back to Step 1, and so do all those people in the previous steps, how many times have we counted each tax dollar paid? (2) Those other entities aren’t me, and don’t exist for me; they have purposes of their own (see third paragraph preceding). If they were exempted from their taxes, the money they don’t pay doesn’t wind up in my pocket if they can help it.

In short, the attempt by the shills of the corporate CEOs to pretend - and convince others - that every dollar of tax paid by the corporations is really paid by ordinary people who neither pay those taxes, nor receive any of the income being taxed, is a rampantly bogus and dishonest twisting of reality.

Just because the boys at the big corporately-funded foundations are paid big bucks to make the case for that POV doesn’t make it a legitimate argument. It just makes it a bad argument with a lot of corporate money behind it.

Better get your own pants up from around your ankles, bucko.

BTW, your compounding argument may have made some sense in the 1970s, but not in today’s global/internet economy. People can’t just tack on whatever they want to prices anymore; it doesn’t work like that.

73

Thanks, Scylla. I’ll re-run the numbers for $53,000 at the same time I redo the state tax effects on $38,885.

74

Sorry, RT, but your summary declaration does not change the facts. Taxes are extra cost.

If the designing components bear taxes, and the mining components bear taxes, and the extrusion components bear taxes, and the milling components bear taxes, and the assembly components bear taxes, and the distribution components bear taxes, and the inventory/storage components bear taxes, and the transportation components bear taxes, and the display components bear taxes, and then there is a sales tax at the point of purchase (after the taxation of earnings), and then all of those costs are marked up all along the way — in a compounded sequence of mark-ups, there results a sale price (which is the price you tax at POP, after all) that is bloated beyond all reason.

You can simplify the hydraulic equation of a river by making it be perfectly still with perfectly regular banks and no sediment.

But what good is that?

75

Lib:

While many of those taxes you mention do exist, corporations actually pay only a very small percentage of them. They are usually gotten back through local and federal subsidies, depreciation, and what is referred to as creative accounting.

A large corporation operates under a much less onerous tax burden than your average Joe.

76

I agree, Scylla.

But the subsidies come from guess what.

77

Plus, it’s a damn good thing that they can depreciate some of it because if they couldn’t, a pencil might cost a hundred dollars.

78

Well, there is no one answer.

A largish portion of corporate subsidies come from the state and local governments.

If Rubbermaid builds a plant in Pleasantville, PA, Rubbermaid can pretty much expect to get a break on state & local taxes, get funds to build the plant, receive advantageous interest rates which are often funded by municipal bonds on their construction. Property taxes may be waived, land donated etc. etc.

This is great for all concerned because Pleasantville gets a new industry which boosts its economy, more jobs, more local expenditure, and higher tax receipts.

This is almsot completely funded by state and local Governments whose economies receive fantastic benefits by attracting a corporate citizen.

You and I don’t pay for it, we benefit from it.

79

Who funds the “state and local Governments”?

Besides, if tax breaks give such “fantastic benefits”, why not eliminate taxes altogether?

80

I’m glad you pointed out the irony there, Lib. I was chuckling too uncontrollably to type, so I had to give that one a pass.