Sometimes accomplished with torches and pitchforks.
“If we raise taxes on corporations, what incentive will they have to make money other than the fact that it’s the sole reason they exist.” - Stephen Colbert
If we tax rich people at a higher rate, because as has already been pointed out - they’re the people with the money - they may try new tricks to hide money, but they’re not likely to stop trying to make money altogether.
The top rate was 70% before Reagan took office, had the rich been making no money and no investments in that era?
The 70% rate was never very real either. In 1979 the Top 1% paid an effective Federal tax rate of 37%. In 2007 the Top 1% paid an effective Federal rate of 29.5%.
Right now the real issue seems to be individuals who make more than $10m a year. Strangely it seems that for people up make up to $10m a year, the more they make the more their effective tax rate is. People in this category often look like Newt Gingrich who actually paid over 30% in taxes, because most of their income is earned income.
Over $10m, the higher your earnings go the more likely it is you’re making money from non-earned income sources (investments), so by the time you get up to guys like Warren Buffet (who takes a $100k salary but makes hundreds of millions a year from investment income) they’re paying a very low effective rate.
My earlier proposed plan to tax all income earned over $1m at the same rate would mostly correct this issue.
Are 13-figure numbers meaningful? (Teradollars; 1 Teradollar = 1000 Gigadollars).
I ask in all seriousness since a Doper with some familiarity with economics perhaps closest to you in thinking characterizes teradollars as “chump change” or “rounding errors.”
What I think is that Clinton-era taxation rates worked fine. Lowering tax rates is the major cause of recent deficits. Second is war spending. (FDR raised taxations during WWII, tax-lowering by GWB during War goes beyond mere stupidity to be reprehensibly cynical.) Right-wingers like to focus on Socsec and related “entitlements” when they discuss the “debt,” but that should be a different debate.
Correct. Tax policy back to late 20th century.
Good loopholes are good, bad loopholes are bad. Stated differently, “just get rid of the loopholes” thought on tax revenue increase is reminiscent of “just cut the waste” thought on spending cuts.
How does that jibe with your title. The article seems to agree that raising taxes on the rich is a necessary part of the answer.
Its a stupid start. Our spending problems pretty much begin and end with medicare/medicaid. You want to simplify the tax code, thats fine but thats not how you balance the budget. Long term, the fiscal threat is health care costs.
The problem with getting rid of loopholes is that they are pretty easy to bake right back in (just ask every congress between 1986 and 2011). Some of these “loopholes” are things like the home mortgage interest deduction or ROTH IRAs or insurance policies.
Yes to all of the above.
Perhaps we should erase the distinction between different types of income. Some economists think that we we don’t cut capitalists a special deal, they will take their ball and go home. They will divest from America and invest in places like China and India. I say bullshit. The whole world is engaged in a tax race to the bottom, they all want to be the next Ireland without the crash. This sort of folly is something the industrialized nations need to get together and talk about because the world cannot sustain this sort of race to the bottom that forces countries to start engaging in mercantalistic practices to raise enough revenue from a tax rate that cannot sustain their country from internal economic activity.
Oh I think 50% is about right.
Now we’re just horsetrading (at about 380K/year over 10% of your income is investment income), we are looking for principles. So far you have said we should eliminate the difference between earned and investment income. Great we agree there.
I think we already have something like this. There was a exception for performance based pay and that is why you have these ridiculous stock options that reset because they are not in fact performance based but the corporation would still like to deduct them. Of course you have some performance based pay that is very heads you win and tails I lose, which I wouldn’t have so much of a problem with if they didn’t pretend it wasn’t ordinary income.
Yeah its all considered. The CBO has more than a few economists that work on things like that.
[quote=“Martin_Hyde, post:35, topic:610265”]
Every first world country has some degree of income redistribution. Just because of thing like the freerider effect and etc. However there are material differences between what I would deem a “indirect incidental” income redistribution and “direct, intentional” income redistribution.
Most funding for schools comes from local property taxes. The guy who lives in a $10m mansion pays far more in property taxes, but he receives the exact same public schools and exact same access to public schools as his neighbors. He may send his kid to private schools, obviously, but he still receives back the same public school system as his less wealthy neighbors. Some portion of funding for schools also comes from both State and Federal governments, and the guy living in that $10m mansion almost certainly pays more State and Federal taxes than poorer people as well. (Even if he pays at the 15% effective rate, he probably pays more in State and Federal taxes than a middle class person earns in a whole year, when speaking in real dollar amounts.)
Would you call medicare a direct intentional income redistribution or would you say that because it provides services rather that direct supplemental income, its not “income redistribution” Because I have trouble distinguishing between medicaid and medicare aside form the fact that medicare recipients have made a token donation to the system.
So that is vaguely a form of “indirect income redistribution.” Because obviously even persons who don’t pay into the tax system get to send their kids to school, and thus they are receiving benefits paid for by the wealthy.
And why would universal health care be any different?
Would Steve Jobs “deserve” a hundred million dollars if he added tens of billions of dollars worth of value to Apple that another CEO would not have? These sort of people are out there of course most people that earn that kind of money don’t deserve it but it is a side effect of a capitalist system.
In 2011 around $1.2T in personal income was “income earned at the $1m and more level.” What I mean is, if you take the total of all income GREATER than $1m earned by any individual (so if you make $2m, $1m of your income goes toward this total), it equals around $1.2T.
That is twice as much money as is generated at the $0.5m-$1.0m level (around $625 bn) and almost as much money as is generated at the $0.2m-$0.5m level ($1.5T), despite the >$1m number being represented by only 433k tax units and the $0.2m-$0.5m level being represented by 5.3m tax units (essentially tax filings.)
I have no numbers on the average tax paid on that $1.2T of “income earned over $1m a year.”
If it’s 15% then the government collects $180bn a year from this; and adopting the “Martin Hyde rule” of taxing all income over $1m at the top marginal rate you would instead collect $420bn.
I don’t have anywhere near the resources required to figure out the complexities of tax rates (this is something that legitimately takes a staff of people with large resources.) However, just based on back of the envelope math; if you taxed earnings at the:
75k-100k level @ 28%
100-200k level @ 33%
200-500k level @35%
500k+ level @35%
You would generate, around 2.3T in revenue from personal income taxes. in FY2011 that would equal the entire revenue collected by the U.S. Government, and would represent a 1.2T increase over the 1.1T in personal income taxes collected in 2011. That would essentially close the budget deficit over night.
You could also structure the taxes to be:
75k-100k @25%
100-200k @30%
200-500k @33%
500k-1m @ 35%
1m+ @ 40%
and close the deficit and it would also be more progressive than my first numbers (which would actually be a moderate tax increase on persons earning 75k-300k or so.)
However there is much to be learned from California’s budget woes. The problem with overly relying on the wealthiest people for your government revenue is that their income is vastly more volatile than the working class. A California government economist basically showed how the dot-com boom and its many dot-com millionaires caused California to spend too much based on tax receipts from these new millionaires, when many of them saw 60-80% reductions in income California was basically bankrupted and has never fully recovered.
It’s undeniable that “flattening the tax burden” is the same as raising taxes on the middle class. Unfortunately though, for government stability, I think you do have to try and structure the tax rate so you aren’t overly dependent on the wealthy.
The real problem of course is during booms the wealthy benefit the most and governments get infusions of cash that was unexpected. This results in smaller than expected budget deficits or even budget surpluses, and then a large increase in spending follows. I wish there was some structural way we could stop Congress from crazily expanding the Federal government’s spending profile just because it is collecting more money than expected.
Single or married filing jointly?
It’s based on number tax units at those income levels and total income at those income levels. Tax units apparently represent both filing and non-filing persons, so I’m guessing that married filing jointly counts as one tax unit.
Essentially I believe the numbers work out as long as the same proportion of persons file single/jointly as they do now.
As an aside I’m actually against any financial benefits of marriage and don’t believe you should be allowed to file jointly.
Okay. For fun I was going to use your suggested rates to recalculate my 2010 taxes and see what difference it made (I am in your 33% range, married filing jointly). However, if your suggestion were put into practice, the bands would be lower than you stated for single filers and higher for joint. So I cannot really do my exercise.
I support letting all the Bush tax cuts expire and going back to Clinton-era rates. When I calculated how much extra I would have to pay, the answer is… zero. That’s because all the “tax cuts” endowed on me by GW were crushed by the Alternative Minimum Tax. Hence it is even more difficult to calculate the effect of changing tax rates unless you know how to cater for AMT. Better idea - eliminate the AMT because it doesn’t even affect the very high earners anyway.
I basically agree with you, although forcing couples to file separately would still allow married couples to organize their income to benefit. Example - put all investments in the name of the lower-earning spouse.
There are no “side effects”,** Damuri**, there are only effects. You are surrendering judgement to the holy Free Market, blessings and peace be upon it.
And your focus on Steve Jobs is like insisting that genius is the norm, rather than the extreme exception. Steve Jobs was a brilliant, prickly and insistent asshole, he would have been the same person if you paid him ten dollars or ten billion.
And how many New Cokes, Deloreans, and Nick Cage action movies do you imagine there are relative to the Iphones? If we, the people, had not been blessed with the Iphone by Steve Jobs, it never would have happened? We would still toil in darkness and despair, groaning for the product that never arrives? Alas! Waiting for Gadget.
Could we have ever managed to conduct our lives without the CDO and the negative-amortization mortgage?
I don’t have an Iphone. I have a cell phone, its best use is to keep me advised as to precisely what time it is. I don’t “text” if I can avoid it. (Now, you kids get off my LAN!..)
But my question to Martin was simpler than all of that, only that the word “deserve” implies a moral judgement, a weighing in the balances. Typically, this judgement was to be rendered by an all-seeing, all-knowing God. But transferring that judgement from a God to a free market? I don’t actually believe in blasphemy, fuck Him if he can’t take a joke.
Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.
- John Maynard Keynes
Preach it, brother.
So is safe cracking.