What conservative decided that liberals believe 92k/year is rich?

I’m the guy that started that rumor. Sorry about that. I tried to correct it with a later post, but I fear that the damage was already done through my initial miscalculation.

Sorry to hear about your financial difficulties. I know how it is because I’ve been there.

Growing up, my father made about $30K per year, and my mom volunteered at a local hospital. When I was in middle school, my father developed a medical condition that required him to retire from his job, and made finding other employment pretty difficult. He worked a total of about 9 months over the next 8 years. After about a year and a half of having a family income of $0, my mom was able to talk the hospital administration into paying her the princely sum of $13,000 per year. And just two years after that, she got a 2% raise.

Our family of 5 (2 parents, 3 boys) lived in a 1500 square foot “house.” I put house in quotation marks because there were often holes in the roof and walls that we couldn’t afford to get fixed. We almost never ran the heater during winter (we’d wear coats in the living room), or the air conditioner in the summer (in Texas, that’s pretty unpleasant). So our “house” didn’t offer much protection from the elements. Also, the plumbing didn’t always work, so we didn’t always have running water. Cable tv? We had a radio. When we finally got a tv, we only got one station (which came in fuzzy).

We almost never had new clothes for the first day of school. When my shoes would split or get holes in them, I’d use duct tape. Our telephone wasn’t always turned on. One Christmas, my parents wrapped up things that we already owned and gave them to us as presents. We didn’t always have snack food in the cupboards, but there was always food on the table for dinner, even if it was frequently low grade meat mashed into hamburgers, or chopped into tacos, or ground into generic-brand hamburger helper.

As for medical care, my mom worked at the hospital, so doctors would usually see us free of charge (or at very small expense). But I didn’t see a dentist for 10 years after my father “retired.”

I could go on, but here’s the point – as bad as I had it, there were others that had it worse. My parents were smart and industrious people that could stretch a dollar. We had free schools to attend, beds to sleep in, food on the table, clothes on our backs, and as corny as it sounds, it made me realize what’s important in life, and what’s really necessary. Cable TV isn’t necessary. Cell phones aren’t necessary. Nice clothes aren’t necessary. A new car isn’t necessary. If you think you’re poor because you don’t have any of these luxuries, you’re crazy. Our family of 5 would have thought that we were the Rockefellers if we had $19,600 per year.

My mom spent some time growing up in the Phillipines and Thailand, and some of those people had it bad. Compared to them, even the poorest people in America live like royalty. And here’s another amazing thing about America – my older brother went to one of the best colleges in the nation on an athletic scholarship, my younger brother went to one of the best colleges in the nation on the government (military academy), and I went to a great college and grad school totally on student loans. I now earn well over the $92K per year “threshhold.” I send some money home every month, and I also have monthly student loan payments that would knock your socks off, but guess what? I’m 28 years old, and I’m freaking rich.

Maybe that’s because they pay a higher percentage of their income in taxes so tax cuts tend to effect them disproportionately.

Or maybe it’s because you’ve been listening to the democrats who apparently get upset because income tax cuts don’t help people who don’t pay income taxes.

Uh, I’m no democrat (or republican) and I cerrtainly don’t listen to them babble about anything. When I said “tax cuts should affect everyone equally” I was well aware that the wealthy, who already pay the most in taxes, would also stand to get the most back.

I don’t know anyone who has ever said that tax cuts should go to people who don’t pay taxes. I suppose it is possible that someone, somewhere once did, but I don’t know.

Just because they pay more in taxes doesn’t mean a tax cut should affect them disproportionately—in fact my problem is that it does. Tax cuts should affect all brackets equally, IMO. And by “equally” I do mean “proportionately”. A 10% tax deduction means 10% across the board; ten percent of nothing is still nothing.

I see. So, if, for example, I pay 39% of my income in taxes and you pay 30% in taxes, it’s unfair if I receive a 10% tax cut (reducing my rate to 36%) but you receive a 5% cut (reducing your rate to 28.5%)?

Taxes are not done like that. That you pay 39% of your income as taxes does not indicate what I care about. Consider that tax rates affect income brackets. A tax rate of 40%, for instance, will apply to all income over (say) 50K a year. If you make 51K a year, only 1000 will be taxed at 40%. [totally hypothetical numbers]

My moaning about tax rates is more or less bunk, however, as a fair tax scheme seems pretty much impossible to create as a permanent thing. I just feel that if we’re cutting taxes, all income brackets should be adjusted equally.

That is very unfair, why should the gov’t take 36% of what you make and 28.5% of what the other guy makes. What are we suppose to live on. How are we going to grow the country if we have such a drag on our income? 10% to 18% sounds alot fairer to me.

Back to the OP. I think after the lib/dem’s cryed tax cuts for the rich it was found that the top 10% would get back the most - this equated to 92k/yr.

If all income brackets are adjusted, then the rich (those whose income spans more brackets) will get more of a cut than the poor. Which is why it always baffles me when people talk about tax cuts being biased to the rich–it’s because they have more money to start with and pay more taxes. The only way I can think of to cut for the poor only is to raise the upper brackets while lowering the lower brackets. Of course, if you just barely cross into the upper brackets you’ll get screwed on that income, etc.

Besides, I think everyone should pay taxes. We’re already too close to having a voting majority that isn’t taxed anyway.

What we should do is move away from income tax and move towards a consumption tax.

The income tax system, plus social security and medicare, are ridiculously complex. Replace them with a system that taxes people on what they spend instead of what they earn. Alternately, eliminate all deductions but then exempt the first $20k of income (or some such) and tax the rest in a way people can understand without hiring an accountant.

Why, so all the people who do not make enough money to save are penalized for existence?

Huh? Money saved today is money spent tomorrow. The only way a sales tax would not apply is if the world ended suddenly.

No one is saying otherwise. The point is that the poorer one is, the larger of a percentage of their income goes to plain old consumption, rather than savings or investment. This would make the tax rate extremely regressive. Not the best idea.

Well, you just have to think more imaginatively. Well, okay, it may be hard to design cuts that give the rich nothing but it isn’t hard to design ones that give them less proportionally than the fraction that they pay of the income taxes. For example, you could cut only the lowest marginal tax rates. That way, there is a maximum dollar amount that a person gets back…i.e., if their income goes outside of those lower brackets, the cut saturates rather than continuing to grow with income.

Also, you could cut payroll taxes. By focussing the cuts on income taxes only and then making them roughly proportional, you are making the cuts in tax burden as a whole regressive because the income tax is the most progressive tax there is (other than the gift & estate tax which Bush is also eliminating).

If we look at what has happened in our economy over the last 20 years, we see that the richest have seen their real incomes skyrocket (by something like 150%), the median income folks have seen rather anemic growth (essentially no growth in real hourly wages … the growth came from working more hours), and the lowest income folks have seen essentially no growth or even some decline I believe.

This shows that the gains from the growth of our economy have gone mainly to a select few who now pay a larger share of the taxes than 20 years ago simply because they have a large share of the income. Thus, trickle-down policies are indeed producing only a trickle and now is not the time IMHO to give those who have benefitted so handsomely from the economy a huge tax cut while those who haven’t don’t get much.

I take it that you are a reader of the editorial pages of The Wall Street Journal? This zany argument, which they have been pushing like there’s no tomorrow is based on various deceptions and half-truths. For example, they tell the part of the story about the share of the tax burden without discussing the share of the income received by various groups (and particularly how that has changed with time). [Thus, their solution to the explosion of inequality seems to be to continue lowering taxes on the wealthy lest their windfalls make it such that they are paying too high a share of the total tax burden!] And, they conveniently ignore taxes they decide don’t count, like payroll taxes, since they don’t like Social Security anyway! (Boy, I guess that means I can ignore taxes that go to things that I don’t like!)

This is true although there is a way, proposed by Robert Frank at Cornell, to structure a consumption tax progressively. In order to do that, you can’t just impose a sales tax…You instead have to still have people fill out a form but they report both income and the amount saved from which one can then deduce the amount consumed and then tax accordingly with whatever rate structure one desires. Here is more info about it:

http://www.inequality.org/frankconfr.html
http://twotom.home.mindspring.com/timmy_s_rover.html
http://www.news.cornell.edu/releases/Feb96/aaas.frank.dg.html
http://www.res.org.uk/media/frank.htm

That is an interesting notion… where was this guy when I made my proposal for a progressive sales tax?!

Is a plot of the Federal Government’s take of all personal income as a % of GDP since 1930. I’ll look for the cite, but it shouldn’t be too hard to find with a Google search. It should also be available by searching back issues of the WSJ, if anybody has access to that. I saw the chart again (which has been republished numerous time) about 6 months ago on the op-ed pages.

The Fed’s take of all personal income has rarely varied outside of a tight range between about 17% and 20% of GDP regardless of income tax rates, which have varied wildly themselves between (nearly) zero and up to 70% in the 1970s. Currently the take of GDP stands a smidgeon over 20%, one of the highest takes on record.

What does this prove? Well, it’s a pretty damn good peek at empirical evidence of a Laffer-type phenomenon, which purports that the government will influence behavior and economic activity, and hence IT’S OWN TAKE OF INCOME, by how it adjusts rates. And the take as a % of GDP seems to remain fairly constant despite a wild range of tax rates.

So what to do? Well, the obvious answer is to maximize GDP - which means growth - because then (1) the citizens will be happy with higher incomes and (2) the government actually makes more money too! Republicans and Democrats could both be happy…imagine that!

How do you think you energize the economy and encourage growth? By taxing more and increasing the size of government? You have to be completely disingenious to truly believe that argument.

No, you do it by making productive investments and rewarding industrious behavior by allowing people keep as much as possible of what they’ve earned. Why is that so hard to understand? The government probably has an active role to play in the first (the productive investments part) in terms of large infrastructure projects (highways, airports) education, etc. and a largely passive role to play in the second, by getting the hell out of enterprising people’s way.

I love debating this subject, by the way…as if you couldn’t tell.

FYI, 2002 tax rates:

Joint Single Rate

0-12,000 0-6,000 10%
12,000-46,700 6,000-27,950 15%
46,700-112,850 27,950-67,700 27%
112,850-171,950 67,700-141,250 30%
171-950-307,050 141,250-307,050 35%
over 307,050 over 307,050 38.6%

Even Bill and Melinda Gates only pay 10% on the first $12,000 they make. They pay 15% up to $46,700, 27% up to $112,850.

So lowering the first bracket saves everyone about the same about of money - at least everyone that passes into the next bracket. All joint returns currently pay $1,200 in taxes on this money. Lower the bracket and every joing return in excess of $12k will save $120. Even Bill and Melinda.

BTW, because we don’t pay social security taxes on our income over a certain level ($76,000? something around there), and we pay significantly less sales taxes as a total percentage of income (due to the fact that more of our income gets saved) our total tax burden as a percentage of income has gone done as our tax bracket has gone up.

Working slobs like me spend a hell of a lot more than we invest. Taxes on expenditures will necessarily hit the lower classes a lot harder than the upper classes, which means that the lower classes will bear a greater burden of taxation than the upper classes if we replaced income taxes with consumption taxes. Take $1000 away from someone who makes $25,000 a year, and it hurts his standard of living a lot more than if you take $1000 away from someone who makes $100,000 a year, and it doesn’t matter iwhether you take that $1000 away through sales taxes or through income taxes. You are right to say that folks who make less than $20,000 grand shoudn’t pay income tax, but I’d adjust that to say the folks who are in the lowest quintile (sp?) shouldn’t pay income tax.

You are, however, quite right to say that the tax laws are much too hideously complex. They should be much simpler so that folks of all income brackets would have a much clearer idea of excatly how much they’re paying in taxes.

Yeah…Frank’s an interesting fellow. And, the book he co-authored “The Win-Take All Society…” is an interesting read. (Well, okay, at least the part that I’ve read.)

Well, after reading a certain other Frank on the recommendation of Gadarene I think I’ll go ahead and check this one out. Why not? What have I got to lose, my conservativism? :stuck_out_tongue: :smiley:

Just to make a point here though when someone makes the inevitable claim that this shows that the government is just spending more and more of our money (relative to the GDP): While revenues as a percent of GDP are high now, outlays as a percentage of GDP are at quite low values…you have to go back to 1974 to be as low and the mid-1960s to be consistantly as low. [This is as of 1999…Now that we are back into deficit spending, I’m not sure how these numbers have changed.]

Well, that is one interpretation. Another is that while nominal rates might have bounced around quite a bit, the actual percentage of people’s income that taxes take has actually remained quite a bit more constant. I’ve seen plots of that somewhere before.

But,

(1) Noone really knows how to do this it.

(2) It completely ignores distributional issues…I.e., it ignores the fact, as the U.S. has proven over the last 20 years, that you can have pretty healthy growth in the economy while having quite anemic growth in the real incomes of the median and below median folks.

As I noted in another thread on taxation, I have never really seen people present much evidence of why marginal tax rates would make that much different at the top of the income ladder. And, at some point, money becomes more of a way of keeping score than really being all that useful. I mean, do you really think Bill Gates is going to say, “You know, if I got to keep 67 cents of every dollar I earn, I would just keep working like the dickens but since I only get to keep 60 cents, I think I’ll just close up shop and go home”? I can understand how differentials in taxation will drive people in certain directions 'cause those rich folks have good accountants who are paid to “maximize their score” but in terms of variations in the overall rate (within reason), color me skeptical. Will football teams try less hard if we lower the score for a touchdown from 7 to 5 points?

So do I. I have a friend who checked out these boards on occasion and she told me that if a thread had the word “tax” in the title, she knew I’d be in there.

First, we’ll have him reading all the leftist Franks. And, then…

(Oh wait, did I just make our plot to convert erl public?!?)