Income Tax and the Rich Myth (Liberals Read)

• derek bomar

  

  fish82;817375 wrote:That's irrelevant. In fact, it actually demonstrates that the "progressive" tax code is working as intended.

  
  it's not irrelevant. his whole argument is based on the fact that the top is paying (as a percentage) more than they previously have. That's true that the total percentage of the pie they now pay is more, but you have to ask: why? ...it's because the income gap between the top and bottom is wider than it was previously.
  
  I'd explain it to a 3rd grader like this:
  
  Suppose me and you are the only two people in the economy. If I made 100k last year and you made 200k last year and we both had the same tax rate (we wouldn't in real life but that's not the point) of 20%, you would pay 66% (200*.2 = 40 ... 40/60 = 2/3) and I would pay 1/3 of the total tax bill.
  
  Now say a year goes by and your wages double while mine go up 10% ...both of us should be happy we got a raise...
  
  Now your % of the total tax bill has gone up to 78% while mine has dropped to 22%...but we're still paying the same 20% tax rate as the previous year.
  
  The fact that the top's increased percentage of the total revenue pie is being used to show they're being taxed more than ever is retarded. It's just not true.
• fish82

  

  derek bomar;817648 wrote:it's not irrelevant. his whole argument is based on the fact that the top is paying (as a percentage) more than they previously have. That's true that the total percentage of the pie they now pay is more, but you have to ask: why? ...it's because the income gap between the top and bottom is wider than it was previously.
  
  I'd explain it to a 3rd grader like this:
  
  Suppose me and you are the only two people in the economy. If I made 100k last year and you made 200k last year and we both had the same tax rate (we wouldn't in real life but that's not the point) of 20%, you would pay 66% (200*.2 = 40 ... 40/60 = 2/3) and I would pay 1/3 of the total tax bill.
  
  Now say a year goes by and your wages double while mine go up 10% ...both of us should be happy we got a raise...
  
  Now your % of the total tax bill has gone up to 78% while mine has dropped to 22%...but we're still paying the same 20% tax rate as the previous year.
  
  The fact that the top's increased percentage of the total revenue pie is being used to show they're being taxed more than ever is retarded. It's just not true.

  Where did anyone say that the rich are "being taxed more than ever?" The point of the OP (as well as tk421's point) is dispelling the myth that the rich aren't paying "their fair share" of taxes, which they most certainly are. Their incomes are rising at a faster pace, and so is their share of the total tax burden.
  
  And since 1980, the average tax rate for the top 1% has dropped 34%, while the rate for the bottom 75% has dropped by more than 50%...which kinda blows a hole in your "3rd grade math" theory as well. They're paying a lower share of the pie and getting a better break on effective rates.
• derek bomar

  

  fish82;817687 wrote:Where did anyone say that the rich are "being taxed more than ever?" The point of the OP (as well as tk421's point) is dispelling the myth that the rich aren't paying "their fair share" of taxes, which they most certainly are. Their incomes are rising at a faster pace, and so is their share of the total tax burden.
  

  tk421;815632 wrote:Also, I just noticed this but another liberal myth busted here. Notice the top 5% have only 34.73% of the total AGI but pay over 58% of the taxes. So a group who only makes slightly over 1/3 of the money pays more than half of all taxes. Sounds like to me the rich pay more than their fair share of the taxes.

  Not a stretch to see what he's getting at. And to your point about about the tax And to your point about the lower about the top's rate only dropping 1%...well that's fine, because most of their income is in capital gains, which again, is well below what everyone else is paying in income tax. Not a tough concept. They're not overtaxed.

• fish82

  

  derek bomar;817719 wrote:

  fish82;817687 wrote:Where did anyone say that the rich are "being taxed more than ever?" The point of the OP (as well as tk421's point) is dispelling the myth that the rich aren't paying "their fair share" of taxes, which they most certainly are. Their incomes are rising at a faster pace, and so is their share of the total tax burden.
  
  
  
  Not a stretch to see what he's getting at. And to your point about about the tax And to your point about the lower about the top's rate only dropping 1%...well that's fine, because most of their income is in capital gains, which again, is well below what everyone else is paying in income tax. Not a tough concept. They're not overtaxed.

  It's easy to see it either way. It's hard to say a guy pulling down $1.5 mil a year is "overtaxed," but at the same time, their percentage of the tax burden is considerably higher than their share of AGI.
  
  And the guy making money on capital gains is paying 15%...the national average is 12.2%.

• majorspark

  

  Obama is out their using the children to clip the republican's nuts.
  

  "If we do not have revenues, that means there are a bunch of kids out there who do not have college scholarships," Obama said. "[It] might compromise the National Weather Services. It means we might not be funding critical medical research. It means food inspection might be compromised. I've said to Republican leaders, 'You go talk to your constituents and ask them, "Are you willing to compromise your kids' safety so some corporate-jet owner can get a tax break?"

  Oh my. Tax them now. Our kids will have no idea when the next tornado is coming. Our food supply is going to be contaminated. All this so some fat cat can sip wine and brie while prancing around the country in his private jet.
  
  LOL. Sad thing is alot of voters believe this shit. And only in Washinton DC is leaving a tax rate unchanged considered a tax break.
  
  http://nationaljournal.com/whitehouse/obama-it-s-kids-versus-corporate-jets-on-debt-ceiling-talks-20110629
• derek bomar

  

  fish82;817733 wrote:

  derek bomar;817719 wrote:
  It's easy to see it either way. It's hard to say a guy pulling down $1.5 mil a year is "overtaxed," but at the same time, their percentage of the tax burden is considerably higher than their share of AGI.
  
  And the guy making money on capital gains is paying 15%...the national average is 12.2%.

  
  the national avg also consists of people who pay no income tax - not trying to say they should or shouldn't pay income tax, but it'd be different if you took those people out

• fish82

  

  derek bomar;817737 wrote:
  the national avg also consists of people who pay no income tax - not trying to say they should or shouldn't pay income tax, but it'd be different if you took those people out

  Fair enough. How about the top 50%? Pretty much all of them pay something...that's 13.6%.
• derek bomar

  

  fish82;817803 wrote:Fair enough. How about the top 50%? Pretty much all of them pay something...that's 13.6%.

  
  how many people pay income tax? i honestly don't know.
• derek bomar

  

  fish82;817803 wrote:Fair enough. How about the top 50%? Pretty much all of them pay something...that's 13.6%.

  
  and, again, I'd have to see the data, but I have to believe the majority of the top 1% is earning money through capital gains, whereas the majority of the bottom is not. So if the "breaks" we gave to the bottom lead to a national avg within 1-2% of the capital gains rate for those who pay taxes, I'd say it's pretty even...no?
• fish82

  

  derek bomar;817829 wrote:and, again, I'd have to see the data, but I have to believe the majority of the top 1% is earning money through capital gains, whereas the majority of the bottom is not. So if the "breaks" we gave to the bottom lead to a national avg within 1-2% of the capital gains rate for those who pay taxes, I'd say it's pretty even...no?

  
  Sure, I'll settle for evenish.
• gut

  derek bomar;817829 wrote:So if the "breaks" we gave to the bottom lead to a national avg within 1-2% of the capital gains rate for those who pay taxes, I'd say it's pretty even...no?

  
  Oh, you mean the some 50% that don't pay ANYTHING will now start paying closer to 15%? I think that sounds reasonable.
  
  Let's also keep in mind that the capital gains rate is taxing gains on money that's already been taxed (except in the cases of stock options as deferred comp). Sure, let's penalize everyone who is able to save responsibly (bear in mind this could be a substantial increase in effective tax rates for people who are far from rich). There are a lot of potential issues here, but I wouldn't complain if it returned to 20%.
  
  And if I may point out another inequality in the tax code...why should I pay more in capital gains because I invested my money in the market rather than a house, while people who sell their house can exclude the first $250k gain if single and $500k if married?
  
  Anytime the gubmit tries to soak the rich it's usually the middle/upper middle class who get screwed.
• Manhattan Buckeye

  "why should I pay more in capital gains because I invested my money in the market rather than a house, while people who sell their house can exclude the first $250k gain if single and $500k if married? "
  
  Trick question. No one is making gains in housing in the Obamaconomy. $250K and $500K, LOL, maybe losing that much.
• gut

  What people fail to realize is the very wealthy - the ones everyone wants to soak and who already pay the lionshare - can sit on large, unrealized capital gains almost indefinitely. They can take advantage of market swings to offset the gains and other income they need to take to pay the bills. This is mostly likely why - in addition to the many tax shelters and numerous tax minimization/avoidance strategies - that almost no matter what the tax rate the govt only collects around 18% (in a fairly tight range) of GDP.
  
  You can double the tax rate and the multi-millionaire with $10M in income last year will suddenly have only $5M this year...and will ride it out for years offsetting any shortcoming with personal savings and capital losses. Yes, the govt can take in some additional revenue with small tax hikes, but the efficiency of that play quickly falls off a cliff.
  
  This is why, inevitably, the govt is going to institute some sort of consumption tax (most likely a VAT). And, no, Fairtax suckers it is not going to replace any existing tax but will be on top of and in addition to everything else. It is the only option other than inflating our way out of debt (or devaluing the dollar, same thing).
• BGFalcons82

  

  Based on the above and the Class Warfare King of Food Stamp's denigration of the achievers, we are headed towards a major political conflict. This King will never be satiated as he beats the evil scum rich drum into never-before seen heights. We have spent close to 25% of GDP to "stimulate" what's left of our economy and it isn' enough, based on the King's re-election press conference earlier today from the White House. He'd love it to be 30% apparently.
  
  According to the Food Stamp King, we don't have a spending problem, we have a taxation problem. Ty- if you vote to have this King return to the oral orifice, the Mayans would be correct about 2012.
• Footwedge

  Manhattan Buckeye;816069 wrote:It has to do with American confidence, and right now it is in the toilet. Try starting your business in today's market with all of the regulations and "reforms" this administration has enacted. He's simply a poor leader, and a poor President that doesn't have a freaking clue how to even incorporate one's own business. He's an empty suit and his empty suit policies are disastrous.
  
  Why do I even need to argue this? Look around? Does this look like a country in good shape, or at least one with "hope" that good times will come again? I see a third world country.

  The country has been going down the shitter before you even entered the work force. The misery index was equally brutal under Ford and Carter. The misery index was at the lowest under Clinton....but even that was a dot.com charade. The only way to put a stop to the escalating m.s. is to keep American jobs here. Since that is not in the interest of corporate America, then expect things to escalate in the wrong direction.
  
  http://econperspectives.blogspot.com/2009/10/us-misery-index.html
• Writerbuckeye

  

  Footwedge;818171 wrote:The country has been going down the ****ter before you even entered the work force. The misery index was equally brutal under Ford and Carter. The misery index was at the lowest under Clinton....but even that was a dot.com charade. The only way to put a stop to the escalating m.s. is to keep American jobs here. Since that is not in the interest of corporate America, then expect things to escalate in the wrong direction.
  
  http://econperspectives.blogspot.com/2009/10/us-misery-index.html

  
  And yet EVERYTHING this administration has done (is doing) will only guarantee that things get worse.
• I Wear Pants

  Same can be said for what conservatives want as well. They're both pretty fucking shitty.
• gut

  I think the fact that there's no serious talk of a VAT shows just how incompetent Washington is. The Repubs won't raise taxes, which I disagree with IF it went to paying down the debt, but that's not going to happen so I applaud them. No one has the stones to make the deep cuts and changes needed. They're all just going to keep digging the hole deeper while trying to claim throwing in a few handfuls of dirt will fix it.
  
  It's a frightening scenario to think that if rates go to 7% or so interest on the debt alone will be $1 trillion a year. There's no good way to manage that without having a disastrous affect on the economy.
• tk421

  

  No way am I in favor of a VAT. Any increase in taxes will just be willfully spent like all the rest unless a constitutional amendment is passed requiring a balanced budget, even then I'd expect them to find ways around it. I don't have a hope in hell of the budget EVER being balanced the rest of my natural life and I'm not yet 26. Not that I expect this country to have survived in its current form for that long.
  
  A VAT will be along side all the other taxes, you know Congress will NEVER get rid of any tax after it implements it, so having a national sales tax will kill this economy and country faster than you can blink. You think jobs are leaving now, wait until the everyday Americans who live off the government have to spend 30% more on everything.
• Al Bundy

  gut;818048 wrote:Let's also keep in mind that the capital gains rate is taxing gains on money that's already been taxed

  
  If you invest $10,000 and it grows to $11,000. You only pay tax on the $1,000 that you made. It has not already been taxed because you didn't have it yet.
• tk421

  

  That 10,000 came from somewhere, probably taxed. Most folks don't print their own money and then invest it. So, you can get paid at 25,28, whatever your tax rate is and like a good American invest for your retirement and then get taxed on it again. Sounds nice.
• dwccrew

  

  Al Bundy;818289 wrote:If you invest $10,000 and it grows to $11,000. You only pay tax on the $1,000 that you made. It has not already been taxed because you didn't have it yet.

  tk421;818293 wrote:That 10,000 came from somewhere, probably taxed. Most folks don't print their own money and then invest it. So, you can get paid at 25,28, whatever your tax rate is and like a good American invest for your retirement and then get taxed on it again. Sounds nice.

  
  Again, what Al Bundy is saying is the original $10,000 is only taxed once.
  
  Let's say you save $1000 for one year of work (and that $1000 is after tax earnings). You put that into the market and double it. You now have $2000 in the market. You are only taxed on $1000 of that $2000 you have in the market, since the original investment was after tax funds. So you are not "getting taxed again" as you put it. You are only getting taxed on money you didn't have before.
  
  If you were to lose money in the market you could write off your losses, it's only fair that you pay on your gains. Pretty simple logic.
• Manhattan Buckeye

  "If you were to lose money in the market you could write off your losses,"
  
  True to a point, there is a restriction (well restriction(s) both on amount and time) on tax write-offs past the gain offset.
• dwccrew

  

  Manhattan Buckeye;818311 wrote:"If you were to lose money in the market you could write off your losses,"
  
  True to a point, there is a restriction (well restriction(s) both on amount and time) on tax write-offs past the gain offset.

  
  Correct, but my point was that you aren't taxed "again" on previously taxed money as tk421 incorrectly stated. You are only taxed on gains.
• I Wear Pants

  ^^^ This.