Saturday, November 2, 2013
Milking it Money
The problem with progressives and taxes is that they're seemingly never satisfied. I mean, we just got done raising taxes to the level that they've been clamoring for FOR YEARS (and to which I agreed to more than two years ago) and now, before the ink even becomes dry on it, you have folks like Jerry (who's views I generally respect but not on this) not only asking for another 4.6 percentage points but another 10!.................................................................................Look, I am totally in favor of tax reform (a lowering of rates for all and an elimination - or as close to an elimination as we can get - of deductions) and if that mean that the rich end up paying a little bit more, fine, so be it. But this whole "let's keep going to the well until the well becomes dry" approach is really starting to get ridiculous, in my opinion...................................................................................P.S. And it also should be pointed out that a 50% top tax rate today would be significantly more draconian than the one of 30 years ago in that there were far more loopholes and deduction back then (though, no, you couldn't deduct your golf-cart).
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You are wrong in at least two respects. Progressives have "been clamoring for FOR YEARS" to return to the Clinton rates. They did not. The starting point for the top rate is higher.
Two, I would not jump the current top rate by 10%. I would add another two or three levels, say at $1 million, $5million and $10 million with the top rate in the 50 to 55% range.
The top rate during the Clinton years was 39.6% and that is what it is now. Yes, they raised the threshold from $250,000 to $400,000 but when you figure inflation into it, it probably evens off.......And, yes, I should have mentioned that your threshold for the 50% rate was a mil (though your now upping the top rate even more to 55% absolutely underscores my premise here of progressives never being happy).
And the assumption here is that individuals are nothing more than carved pieces of wood who don't respond in any way to government action. The higher the tax rates on earnings the less that people will probably want to earn or at the very least they'll put their money into tax exempt instruments.
Oh, and that example of mine over at Les's I lowballed. The top tax rate in CA isn't 10.3% anymore. It's 13.3% (to go along with a 7.5% sales tax, a $.53 a gallon gas tax, etc.).
More right wing talking points and I don't think you have checked the rate if inflation lately.
Here's the problem with today's income tax rates.
I don't use talking points, Jerry. I just don't think that a family making $250,000 (especially those who reside in liberal bastions such as New York, Illinois, and California) in 2013 is rich or that they need to get hosed yet again by the government.......And that chart from the Daily Kos (really?) is deceptive on several grounds. a) The bottom quintile actually pays between a -1% and a 1% (depending on whether you go to learnliberty or the Tax Policy Institute) effective rate in TOTAL federal taxes while the top 5% pays a 28% effective rate. And b) the top 1% now pays over 37% of the total Federal income tax (despite making less than 19% of the total AGI) and they clearly pay a lot more (as a percent AND in total) than they did when the rates were 91 and 77% respectively.
Alright, so let's do a little summary here. Everything over a million in Jerry's world (California style); 51.45% in federal taxes (I also included the Medicare tax here) and 13.3% in state taxes (not including the draconian sales, vehicle, and gas taxes). Yeah, that sounds like a real excellent incentive structure, for sure.
You seem to ignore the fact that the people do California, themselves, voted to increase their state tax for 7 years as one of the measures, along with budget cuts, that has erased a huge state deficit. CA now has a balanced budget and a slight surplus. The US should follow CA's lead and get their budget under control.
The people of California did it, not the politicians. It also helped that thenCA republicans have been neutered and no longer can obstruct the legislative process.
"...they clearly pay a lot more (as a percent AND in total) than they did when the rates were 91 and 77% respectively."
Prove it. Let's see some real,numbers.
http://taxfoundation.org/article/summary-latest-federal-income-tax-data-2012 - in 1981 the top 1% paid 17.6% of the total federal income tax and in 2010 they paid 37.4%, more than double the amount.
And that CA surplus sounds a hell of a lot more like creative accounting and overly rosy scenarios than it does any sort of quality governance - http://www.realclearpolicy.com/articles/2013/07/30/californias_non-comeback_590.html
And what's with accusing me of using right-wing talking-points? I came out 2 years ago in favor of the top rates going back to 39.6% (I also raised the threshold to 400-500,000) and even rounded it up to 40% AND I came out against the special exemption for capital gains. That's right-wing, in your estimation?......If you're asking me, it's you who's outside the mainstream on this (a 55% top rate), Jerry. The progressive caucus came out with a top rate of 47% and Obama hasn't even come anywhere close to THAT.
Let's look at some more numbers from your tax foundation reference and see if the top 1% is really paying a greater share now.
In 1980 he top 1% earned 8.46% of the total income. In 2010 they earned 18.87% of total income. So of course their share of the total tax paid went up. They earned a greater share of the income, about twice as much.
However, at the same time, the minimum income to be in the top 1% increased from 80580 in 1980 to 369691 in 2010, an increase of 4.6 times. Meantime the minimum income of the top 50% increases from 12936 to 34338, only 2.7 times increase. Again, top 1% saw their income increase about twice as much as the top 50%.
And finally, the average tax rate for the top 1% has dropped from 34.47% in 1980 to 23.39% in 2010, a 32% decrease. During the same time, the average tax rate for the top 50% dropped from 17.39% to 13.06%, a 24% decrease.
It looks to me like the top 1% have seen their income increase more than the top 50%, and their tax rate has decreased more than the top 50%.
In other words, they earn more and pay less!
You're wrong, Jerry. The ACTUAL flesh and blood human beings (again, you treat these categories as if they're immutable) in the top 1% saw their income decrease by 24% from 1996 to 2005 and more than half of them exited the category (that, and more than 3/4ths of the top .01% exited their category) altogether. IN FACT, the top 1% of ACTUAL human beings was the only category that saw a decline in their earnings.......As for the static categories themselves, yes, the share of income of the top 1% (the static category and NOT the ACTUAL human beings) in fact did double but, so, too, did their taxation level. This is alarming to you how exactly?
Why does it so bother you that certain people do well? I mean, have you even bothered to look at just who it is that constitutes the top 1%? It is largely composed of people who have gone to school for 6-8 years and who have worked long and hard hours to establish themselves. That, and they're currently paying over 37% of all federal income taxes. AND they're paying the Clinton era tax rates again. My God, Jerry.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456 - the top 1% pays 29% of it's income to the federal government while the bottom quintile pays 1% (Learnliberty says -1% but since they're libertarian we'll go with the center-left folks). And that doesn't include the massive amount of tax that they pay to the state and local governments.......And that's some pretty creative accounting, Jerry; saying that 37.4% of the total tax burden is LESS THAN 17-18% of the total tax burden.
I have no problem with people doing well. Let me repeat. The average tax rate for the top 1% has dropped from 34.47% in 1980 to 23.39% in 2010. That is a greater decrease than most people. They are now under taxed. Why should their taxes decrease more than anyone else's?
They should pay their fair share!
A lot depends on whether you're looking at the effective rate or the marginal rate and where you start the graph. If you start in 1986, the effective rate for the top 1% (taking into account all federal taxes; income, FICA, gas tax, etc.) was 24.6% and now it is 28.9%. So not only is the effective rate higher than it was in 1986, the total amount is much greater in that, as you have pointed out, the income is significantly higher.
http://www.youtube.com/watch?v=bvqNVs4ix6E - Check out this video, Jerry. It shows that in 1954 and 1964, when the top tax rates were 77 and 91% respectively, the per capita tax revenue was only about $2,600 and in 1984, when the top tax rate was 50%, that number had grown all the way to $5,700. My feeling is that the 39.6% rate is probably just about right (not a right-wing talking-point, right?).
You're the one that started this discussion at 1980. Don't move the goal posts.
39.6%'is about right up to a million or two per year. I believe it should be higher above that limit.
I didn't mean it as a criticism, Jerry, just that people can prove whatever they want depending what they're inputting.......As for the top rate, I might go up to 42.5 over 5-10 million but would refrain from going higher based on a) my respect for private property and b) a suspicion that people would start changing their behavior and that the net result would be less revenue (a 50% top rate today would be far more damaging in that there are fewer loopholes than there were in 1985).......And I'm still not entirely sure why you're so concerned. More than 50% of the people in the top 1% fall out of it on their own via the market every decade.
Alright, let's stick with 1980 as the baseline. In 1980, the average effective tax rate (total federal) was 33% for the top 1% and 7.4% for the bottom quintile. By 2010 those numbers had decreased to 29% and 1% respectively, a 12% decrease for the top 1% and an 87% decrease for the bottom quintile (and this doesn't even take into account the plethora of transfer payments that have increased their purchasing power from 112% of their income in the 1960s to 198% in the 2000s). Yeah, there are definitely people who aren't paying their "fair share", for sure.
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