%@#%@ the unions!

[JimmyRayBob]

I meant for those on middle and lower incomes

so the median income isn't somewhere near the "middle" ?

Please - inquiring minds want to know - what is the source of your information?

 

[mdram]

please, you people know better then to ask for facts from liberals

 

[Tom Ace]

I'd say the rich pay more, always, not "for the most part." And why is it "obviously" not enough?

It depends on how you define the different classes, but sometimes rich people do pay the same or less than non-rich people. It's obviously not enough considering our deficit and the fact that in general non-rich people are paying at least close to the amount they reasonably can.

That would simplify the tax code, and it was proposed by Obama's debt commission. It would be tough getting it to pass though. The left won't like making poor and middle class people pay more, and the right won't like elimination of rich peoples tax cuts.

And thats one reason a flat tax, or consumption tax would be a good idea. Basically a national sales tax. If you buy more stuff, you pay more taxes. You can have exemptions for things like food and essentials. Then the need for tax returns is pretty much eliminated.

I don't envision it making the poor or middle class pay much if any more.

A flat tax would be one tax rate for all incomes, which would be different from a consumption tax. The main problem with a consumption tax is you're taxing people for spending money, lessening the incentive to do so.

And the main thing is we still need a certain level of revenue. Let's say our annual budget is $3 trillion. We still need to bring in that much money, however we tax people.

No but the difference between keeping $50,000 a 90% rate and $350,000 a 30% rate would make a difference.

I'm not sure if there's a typo in there, but I don't understand this sentence. Would you mind rephrasing?

Is all this argument over a 34% rate vs. 26% rate? What rate do you think the rich should be taxed at? Why are they "obviously" not taxed enough?

This argument is about how great the wealth disparity has become in this country and what to do about our budget/deficits. As I said, what I want is a major overhaul that's not just about "34% vs. 26%". Without any exemptions or deductions the tax brackets should look very roughly something like this for a single person:

$0-12,000 - 0%
-$25,000 - 6%
-$50,000 - 12%
-$100,000 - 18%
-$250,000 - 24%
-$500,000 - 30%
-$2 million - 36%
over $2 million - 42%

A business owner should say their taxed too high, and point to high unemployment as an example.

They can do that, but they shouldn't. Taxes that are too high are not the cause of our unemployment problem.

GDP took off in the US in the early 80's, when tax rates were lowered below 50% for the first time in decades.

The debt skyrocketed under Reagan. That's why the GDP went up. That's not really a long-term solution. And again, the economy and GDP did very well for many years with a tax rate of over 70%.

Plus the population of the US was much lower back when tax rates were 70%+, if we went back to the economic activity levels of those times, we'd have millions more unemployed. When population grows, economy has to expand, to find jobs for the extra people.

I'm not sure what this has to do with anything. The economy is bound to expand with more and more people. It's not something you have to plan; it's something that happens because of the extra people. With more people, you have more services necessary, and so more jobs by default.

Name one. Sure it's nice to be your own boss, make your own hours ect. But thats all secondary, if you can't make money and pay your bills, no one is starting a business. Try walking into a bank for a small business loan, and telling them, you don't plan on making money, but you'll have a lot of fun... even non-profits, have to make money to pay people and keep the lights on.

My point is that many people who start small businesses do so partly for money, but also partly for the freedom of being their own boss or a slew of other benefits. The person making $330,000 after taxes rather than $370,000 is still making money and paying bills easily. We're not talking about the difference between bringing in $370,000 after taxes and bringing in $75,000 after taxes. That's why the other motivating factors come into play. Some people want to be lawyers or teachers or accountants, while others wouldn't be able to stand those jobs. In the same way, some people want to start businesses, while others couldn't stand that route. Someone who enjoys accounting would generally take an accounting job paying $50,000 before taking a retail job making $75,000.

 

[mdram]

The Tax Foundation - Summary of Latest Federal Individual Income Tax Data

all the tax info you ever needed

edit table wont show properly

 

[Tom Ace]

20th Percentile:
1982
$15,548

2000
$19,142

2003
$17,984


I agree with JimmyRayBob, do you have a source for your claims?

I believe his point is that, while the income for the middle class and poor went up over the last 30 years, it wasn't by much, and compared to the income rise for the rich over that period of time, it's practically nothing.

 

[cjr72]

Should the measure be economic equality or economic mobility?

What Really Buys Happiness? by Arthur C. Brooks, City Journal Summer 2007

 

[JimmyRayBob]

It depends on how you define the different classes, but sometimes rich people do pay the same or less than non-rich people. It's obviously not enough considering our deficit and the fact that in general non-rich people are paying at least close to the amount they reasonably can.

It's not obvious - considering the deficit. The deficit is composed of TWO things - the second of which is SPENDING!!!!!!!. I, for one, think our government takes in plenty of money as it is - and that SPENDING is the problem.

 

[JimmyRayBob]

The debt skyrocketed under Reagan. That's why the GDP went up. That's not really a long-term solution. And again, the economy and GDP did very well for many years with a tax rate of over 70%.

Again - debt / deficit is a two part equation - we can't ignore government spending.

Also, when tax rates were well north of 50% for the hated rich - there were a LOT more deductions available. Sorry I don't have a written source for that - all I have to go on is what my ex-CPA says about all the tax returns he did starting in the 60's before he retired in the early 90's.

 

[byteware]

Please re-read without the bias. I didn't say they were wrong. I said the numbers they gave didn't add up. They say you owe $2,766, and since you've paid nothing, you get $34 back. That can only happen with some other stuff going on that they didn't mention.

The family of FOUR part is the stuff going on that they didn't mention... you did. You tell them you have a family of four. The rest is basic taxes.

Right, so there are special exemptions/deductions required.

Kids are not a special deduction. They are one of the most basic tax deductions you can have. Period.

And you and the others should really stop taking guesses at things. You're doing horribly.

Ok... so you are married, file taxes, and have kids... and you don't understand how kids affect your taxes... that doesn't speak well of your knowledge on this subject.

 

[byteware]

If you anti union morons want to work for slave labor wages-have at it. Some of us are a lot smarter than that.

Some of us are smart enough to know that those aren't our only two choices.

Then why do you have issue with the current US Tax code?

Because, even though the rich are almost the only ones paying taxes in this nation... they aren't paying enough.

cipher, you DO realise incomes basically haven't increased in the US since the 80s, right?

There are two parts to why this isn't true...

1)incomes have risen.

2)The majority of what would be income increases has gone towards paying health care premiums.

Health care costs have risen about $7000 per household since 1980, and that's where most of the would be income increases have gone to.

 

[JimmyRayBob]

Because, even though the rich are almost the only ones paying taxes in this nation... they aren't paying enough.

How much, exactly, is enough?

Don't you think maybe SPENDING is the problem? (oops - that should probably be a new thread )

 

[Tom Ace]

It's not obvious - considering the deficit. The deficit is composed of TWO things - the second of which is SPENDING!!!!!!!. I, for one, think our government takes in plenty of money as it is - and that SPENDING is the problem.

Yes, spending is part of the equation, but you can't realistically get spending down enough that we don't need more taxes.

 

[Tom Ace]

Again - debt / deficit is a two part equation - we can't ignore government spending.

Also, when tax rates were well north of 50% for the hated rich - there were a LOT more deductions available. Sorry I don't have a written source for that - all I have to go on is what my ex-CPA says about all the tax returns he did starting in the 60's before he retired in the early 90's.

Ah, the old "pretend that the person who advocates higher taxes on rich people hates the rich" nonsense. I don't hate them. I just think their taxes should be higher proportionally.

And there have always been loopholes. There are now, too. It would take a whole lot of loopholes to make up the difference between 80% and 36%.

 

[JimmyRayBob]

Yes, spending is part of the equation, but you can't realistically get spending down enough that we don't need more taxes.

I disagree .... hard choices need to be made before we bankrupt this country. Will Congress make those hard choices - probably not yet - things haven't gotten bad enough yet and i'm afraid that's what it's going to take.

At the rate we are spending, we simply won't be able to support our own debt.

 

[mdram]

Yes, spending is part of the equation, but you can't realistically get spending down enough that we don't need more taxes.

i have no problem if they raise taxes for 100% of the people and for every dollar in projected income from tax increase they need to cut $2 from the budget

i bet you would see less income then prior to the increase

 

[JimmyRayBob]

Ah, the old "pretend that the person who advocates higher taxes on rich people hates the rich" nonsense. I don't hate them. I just think their taxes should be higher proportionally.

And there have always been loopholes. There are now, too. It would take a whole lot of loopholes to make up the difference between 80% and 36%.

Sorry about the "hated" rich part - it's just an expression (and i almost left it out).

Talk to a CPA that did taxes in the 70's and 80's - the deductions that were allowed back then were VERY different. Enough to make up the difference.

 

[cipher6]

It depends on how you define the different classes, but sometimes rich people do pay the same or less than non-rich people.

Can you site specific examples or data?

It's obviously not enough considering our deficit

I could easily say taxes are fine, but "obviously" spending it too high.

and the fact that in general non-rich people are paying at least close to the amount they reasonably can.

So, the middle class being taxed at a "reasonable" level is evidence the rich aren't being taxed enough? I don't follow that one.

A flat tax would be one tax rate for all incomes, which would be different from a consumption tax. The main problem with a consumption tax is you're taxing people for spending money, lessening the incentive to do so.

So, instead of spending more might save and invest, which opens more capital for business and job creation.

And the main thing is we still need a certain level of revenue. Let's say our annual budget is $3 trillion. We still need to bring in that much money, however we tax people.

Or we cut spending.

I'm not sure if there's a typo in there, but I don't understand this sentence. Would you mind rephrasing?

The amount of people willing to risk their capital, and devote their time to start a business would greatly decrease if you had something like a 90% tax rate.

And if the only way you calculate tax rates is look at what your spending, then go tax everyone until you have it all, you'll get a high tax rate fast, decreasing start ups and job creation, and lowering overall GDP and economic growth.

This argument is about how great the wealth disparity has become in this country

Ok, first, what are some causes of "wealth disparity?"

Please note that all figures are presented in 2003 dollars.

Since 1967, the median household income in the United States has risen by 31%, fluctuating several times. The rise in household income is largely the result of an increase in personal income among college graduates, a group that has doubled in size since the 1960s, and women entering the labor force. Today, 42% of all households have two income earners. Household income increased dramatically faster for affluent households with income inequality having increased steadily since the 1970s.[28][29]
While household income has increased, its growth has been slowed by a decrease in married-couple households who tend to have two earners and, therefore, higher incomes. While the proportion of wives working year-round in married couple households with children has increased from 17% in 1967 to 39% in 1996, the proportion of such households among the general population has decreased. This means that the share the most economically prosperous type of household has been dwindling in the United States.[30]
In 1969, more than 40% of all households consisted of a married couple with children. By 1996 only a rough quarter of US households consisted of married couples with children. As a result of these changing household demographics, median household income rose relatively slowly despite an ever increasing female labor force and a considerable increase in the percentage of college graduates.[30]

Is tax code going to fix demographic issues?

and what to do about our budget/deficits.

Why is the only answer to deficits higher taxation? Spending less money also helps keep budgets in line.

They can do that, but they shouldn't. Taxes that are too high are not the cause of our unemployment problem.

I'd say there are many causes for current unemployment levels. But the point is, you can say higher taxes is the solution to everything all day long, but believe it or not, the are people, experts even, that acknowledge more factors... Like spending, and that setting taxes too high hurts economic activity. You seem to ignore everything in economic theory except raising taxes.

The debt skyrocketed under Reagan. That's why the GDP went up. That's not really a long-term solution. And again, the economy and GDP did very well for many years with a tax rate of over 70%.

Can you explain how government dept influences GDP? Can you define "very well" in economic terms? Is 20 trillion GDP "very good?" what about 10 trillion, or 5?

Why did dept skyrocket? Could it have been a recession? Is it possible lowering taxes during that rescission lead to increased GDP, which in turn allowed dept to fall to its lowest levels in years?

Economics is very complicated with countless variables and factors at play, you simplify it to almost comic proportions with your hyper focus on raising taxes on the rich.

Without any exemptions or deductions the tax brackets should look very roughly something like this for a single person:

$0-12,000 - 0%
-$25,000 - 6%
-$50,000 - 12%
-$100,000 - 18%
-$250,000 - 24%
-$500,000 - 30%
-$2 million - 36%
over $2 million - 42%

You realize you've just hit the poor and middle class with a huge effective tax rate hike?

You also realize, those people in the 2 million range, are mostly business owners, the 42% you tax away from them is 42% that they then won't use to expand their business, buy new equipment and hire more people?

I'm not sure what this has to do with anything. The economy is bound to expand with more and more people.

No, its not. Look around the world, many nations have exploding populations, but no jobs for them. Why is the economy "bound to expand?" Just because there are more people, more jobs don't magically create themselves.

It's not something you have to plan; it's something that happens because of the extra people. With more people, you have more services necessary, and so more jobs by default.

There are a lot of third world countries, especially in the middle east, with exploding populations and rising unemployment that would like to hear from you. Where do these jobs magically come from? From more people buying more stuff? But where do these people get the money to spend on stuff? You really need to take some economic classes.

Here we're lucky, over our economic history, it kinda seems, for the most part, the jobs magically appear as more people do. But its not magic, its individuals taking risks with their money. If you set up an environment that limits that risk and makes it easier, more jobs will be created. If on the other hand, you have an environment that stifles creation, like high taxes, jobs will be slower to form, if at all.

 

[Tom Ace]

Because, even though the rich are almost the only ones paying taxes in this nation... they aren't paying enough.

Really? Assuming we're only talking about federal income tax here, when did 53% of the country become rich?

 

[Tom Ace]

I disagree .... hard choices need to be made before we bankrupt this country. Will Congress make those hard choices - probably not yet - things haven't gotten bad enough yet and i'm afraid that's what it's going to take.

At the rate we are spending, we simply won't be able to support our own debt.

None of that disagrees with what I've said. The hard choices that have to be made are to raise taxes and cut some spending. It's not going to happen any time soon, as you say.

 

[Tom Ace]

i have no problem if they raise taxes for 100% of the people and for every dollar in projected income from tax increase they need to cut $2 from the budget

i bet you would see less income then prior to the increase

I'm glad you don't have a problem with them raising taxes on everyone, but I do. Until the rates are proportionally what they should be, taxes shouldn't be raised on everyone. But yes, obviously, spending is at least as big an issue, if not more.

 

[JimmyRayBob]

None of that disagrees with what I've said. The hard choices that have to be made are to raise taxes and cut some spending. It's not going to happen any time soon, as you say.

Just out of curiosity - here's a hypothetical question.

If you could balance the budget by ONLY cutting spending, would you then say that we don't need to raise taxes? Yes, it's a stretch

 

[mdram]

I'm glad you don't have a problem with them raising taxes on everyone, but I do. Until the rates are proportionally what they should be, taxes shouldn't be raised on everyone. But yes, obviously, spending is at least as big an issue, if not more.

and why shouldnt taxes be raised on everyone?
for the low income it could be as simple as getting rid of EIC.
i see no reason to give a refund of 5-10k to someone who has paid no taxes to begin with

 

[Tom Ace]

Can you site specific examples or data?

Honestly, no. I have heard examples, but I can't point them out.

I could easily say taxes are fine, but "obviously" spending it too high.

You could say that, but it's not the case. We can cut back on spending, but not by that much.

So, the middle class being taxed at a "reasonable" level is evidence the rich aren't being taxed enough? I don't follow that one.

OK, our expenses are X, even if we cut out all the frivolous spending. Our revenue is Y. If 75% of those people are paying pretty much what they can reasonably be expected to, and Y is still less than X, then it's the other 25% that isn't paying the amount they should.

So, instead of spending more might save and invest, which opens more capital for business and job creation.

That's not how it works. For the economy to do well, people need to spend money. That's why a lot of the efforts to improve the economy are to get people to spend more money.

Or we cut spending.

I was giving examples, and you're missing the point. The point is in that example $3 trillion is the minimum budget we need to have decent roads, schools, etc. So, cutting spending at that point is not an option.

The amount of people willing to risk their capital, and devote their time to start a business would greatly decrease if you had something like a 90% tax rate.

That's true, which is why I'm not advocating a tax rate of 90%. So, why do you even bring it up?

And if the only way you calculate tax rates is look at what your spending, then go tax everyone until you have it all, you'll get a high tax rate fast, decreasing start ups and job creation, and lowering overall GDP and economic growth.

That doesn't make sense. What are they supposed to do, just pick a number out of a hat to determine how much in taxes they should bring in? The only logical way is to determine how much money you need for the programs that make the country work well, an then tax people accordingly. You'll only get a really high tax rate if you are spending too much. And I'm really not sure how you jump to decreasing start-ups and job creation and such.

Ok, first, what are some causes of "wealth disparity?"

An environment geared towards the rich. The wealth disparity we see now started under Reagan and his "trickle-down" economics. When you give the rich tax breaks and such, the gains don't trickle down to everyone else; the rich keep them. So, with the regulations and deregulations in place to make life better for the rich, it allows their wealth to soar while most Americans' inches up.

Is tax code going to fix demographic issues?

What?

Why is the only answer to deficits higher taxation? Spending less money also helps keep budgets in line.

Yes, it does, which is why I advocate for spending cuts as well. Where did you get the impression that I only want to raise taxes?

I'd say there are many causes for current unemployment levels. But the point is, you can say higher taxes is the solution to everything all day long, but believe it or not, the are people, experts even, that acknowledge more factors... Like spending, and that setting taxes too high hurts economic activity. You seem to ignore everything in economic theory except raising taxes.

No, you seem to ignore everything I say that's not about raising taxes. We're talking about taxes here. Raising them isn't the only thing that needs to be done for the country, but that has been the focus of this discussion. The focus of the discussion was not an all-encompassing idea of how to fix everything in this country. We can discuss that, too, if you want, though.

Can you explain how government dept influences GDP?

Sure, but I thought you already understood all this considering your comments. I don't mind explaining it, though. The GDP is calculated including government spending. It's basically the sum of several different things including government spending and private consumption. If you lower taxes, that gives people more money for private consumption. If you also raise government spending, that raises the GDP. If you do the two together, you really raise the GDP, but you end up with a lot of debt. It's sort of like a person making $50,000 having a $400,000 house and a Porsche. It sure looks like that guy is doing well, but only because he's got debt he will never be able to pay off.

Can you define "very well" in economic terms?

Sure. Pretty low unemployment and decent jobs for most people.

Why did dept skyrocket? Could it have been a recession? Is it possible lowering taxes during that rescission lead to increased GDP, which in turn allowed dept to fall to its lowest levels in years?

It skyrocketed because Reagan cut taxes and increased spending. Over 8 years he tripled the debt. So, no, the increased GDP didn't allow the debt to fall to its lowest levels in years.

Economics is very complicated with countless variables and factors at play, you simplify it to almost comic proportions with your hyper focus on raising taxes on the rich.

I'm responding to your points. You claimed that because the GDP went way up in the 80s after the top tax rate went way down, that obviously means lowering the top tax rate helps the economy. I explained that's only partially true. I'm not the one trying to make things too simple, and you really need to get off of this idea that I'm focusing on raising taxes on the rich. We have been talking about taxes, so obviously I'm focusing on that one aspect. That doesn't mean it's the only part of the larger issue I focus on.

You realize you've just hit the poor and middle class with a huge effective tax rate hike?

That's why I said it's a rough take. The idea is not to hit the poor and middle class. But no, I haven't hit them with those numbers. The main people that would be hit would be parents, and that is a problem that would have to be considered.

You also realize, those people in the 2 million range, are mostly business owners, the 42% you tax away from them is 42% that they then won't use to expand their business, buy new equipment and hire more people?

You do realize that that idea is what led to trickle-down economics which don't work, right? By that logic, we just shouldn't tax business owners, so that they can put all that money into their business. However, in reality, that's not what happens. The guy making $370,000 after taxes is generally not investing more in his business than the guy making $330,000 after taxes.

No, its not. Look around the world, many nations have exploding populations, but no jobs for them. Why is the economy "bound to expand?" Just because there are more people, more jobs don't magically create themselves.

OK, you have a community of 1,000 people and 3 grocery stores. Over a couple of years, that population expands to 2,000 people. Either you need more than 3 grocery stores or you need many more employees at each of the existing stores. The more people buying a product from a company, the more that company can expand and create jobs.

There are a lot of third world countries, especially in the middle east, with exploding populations and rising unemployment that would like to hear from you. Where do these jobs magically come from? From more people buying more stuff? But where do these people get the money to spend on stuff? You really need to take some economic classes.

Here we're lucky, over our economic history, it kinda seems, for the most part, the jobs magically appear as more people do. But its not magic, its individuals taking risks with their money. If you set up an environment that limits that risk and makes it easier, more jobs will be created. If on the other hand, you have an environment that stifles creation, like high taxes, jobs will be slower to form, if at all.

You need to have a stable environment in the firs place. Third-world countries don't have that. In a stable environment, the general concept I illustrated above holds true. It would be better for you not to suggest someone else take economic classes, when clearly it's you who is lacking understanding, especially considering I was trying to have a good conversation. You were doing well for a little while. It's too bad you couldn't keep it up.

 

[Tom Ace]

Just out of curiosity - here's a hypothetical question.

If you could balance the budget by ONLY cutting spending, would you then say that we don't need to raise taxes? Yes, it's a stretch

Good question. I would still say taxes hit the poor and middle class harder than they should relative to their effect on the upper class, but it certainly wouldn't be as big a deal.

 

[Tom Ace]

and why shouldnt taxes be raised on everyone?

Because a lot of people can't afford it. Capitalism is great, and works well when sufficiently regulated. I want to live in a place where you can move up economically and improve your situation. However, to go along with that, I want to live in a place where it's not completely cut-throat, where with an average amount of effort, you can live a decent life. We can only reasonably expect someone making $25,000 to pay so much in taxes.