Who Actually Earns $400,000 Per Year?

by Emily Guy Birken · 5,524 comments

Surgeons

After the unending media coverage of the fiscal cliff throughout December 2012, it was a relief to everyone when a last-minute compromise was reached. In particular, the most reported-on compromise had to do with the extension of the Bush-era tax cuts. Those cuts will remain in place permanently for any individual making less than $400,000 per year, and for couples earning less than $450,000. Those fortunate few who make more than that amount will see their rates rise from 35% to 39.6%.

The news about this particular tax rate increase got me wondering: what professions can expect to earn that kind of money? Since I don’t personally know anyone bringing home $400,000 per year, I decided to find out what kind of jobs command such high salaries:

1. The President

Perhaps the most famous $400,000 per year job is the leader of the free world. The office of president not only pays a $400,000 annual salary, but also provides the president with a $50,000 annual expense account, a $100,000 nontaxable travel account, and a $19,000 entertainment account.

There are some obvious downsides to this particular career, however. Besides being very difficult to get, the job is highly stressful, and advancement post-office can be considered somewhat iffy. And, of course, you can’t expect regular raises: the last salary increase for the commander-in-chief (from $200,000 to the current rate) was in 2001. Prior to that, the previous raise (from $100,000) occurred in 1969.

2. Surgeons and specialists

Even a local general practitioner can expect to pull in over $100,000 per year, but the real money in medicine is reserved for those who specialize. Anesthesiologists, heart surgeons, and brain surgeons can all expect to make up to $400,000 per year at the height of their career. Plastic surgeons can make up to twice that amount.

3. CEOs

The median salary of a Chief Executive Officer is over $700,000. These directors are in charge of both short- and long-term profitability for their companies. CEOs generally have to know the industry backwards and forwards (although there are certainly plenty of counter-examples), and need to have worked their way up over many years.

4. Wall Street Bankers and Lawyers

If you work in either finance or finance law, the place to go for fat paychecks is Wall Street. According to an October 2012 report, “the average salary of financial industry employees in New York City rose to $362,950 in 2011.” While that still falls short of the mark required for the higher tax bracket, it’s important to remember that this figure represents the average (meaning some people are making more) and that there have almost certainly been raises in the past year and a half.

The Top Percent of the Top Percent

These high-income earners are really rare. Consider the fact that most articles listing the highest paying jobs in America don’t even include any professions with median salaries of $400,000. Those individuals making $400,000 per year are in the top one percent of the top one percent — and often, they’re also public figures.

Thankfully, even though individuals in this bracket are few and far between, the government estimates that raising the tax rate on this small group will raise about $600 billion in new revenues over the next decade.

Not bad for a group that small.

What other professions that earn annual incomes of $400,000? 

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current Verizon FiOS promotion codes and promos to see if you can save more money every month from now on.

Looking to save on your mortgage? Here are some good rates...

{ 5524 comments… read them below or add one }

Steven H October 6, 2015 at 6:12 pm

A couple more tonight:
=======
Rick Deckard January 31, 2013 at 5:19 pm
A high tax rate on those jobs that pay over a certain threshold will likely do nothing to the productivity of the top earner. There is no logic to the idea that more pay means proportionally more effort. If that were true, a CEO would be working 100 or more times as hard as his gardener.

Instead, if the tax rate is very high on high incomes, it encourages a company or owner to re-invest the money that would have gone to a bloated CEO salary back into the company itself as the additional $ will hire many more workers at much lower salaries, which can actually increase the productivity.

Reply

Ricardo November 13, 2015 at 5:50 am

Your logic to withhold high salaries from CEO’s is flawed beyond belief. Compensation isn’t about how hard one works, but how effective the effort is. A ditch digger works hard, really hard – but he’s never going to make much money. A CEO who’s hired to turn around a failing publicly traded company (name any one of hundreds) is going to use their skills to work smart and build a team and a culture to right the ship. That is worth considerably more than “working hard”… Your method will not allow great leaders to leave good jobs to attempt to tackle hard ones where there is great risk.

Reply

Steven H November 18, 2015 at 8:32 pm

I see your logic Ricardo, but you are missing the point. I am not raising status or wage of a ditch digger above CEO. Of course a skilled manager should earn a very good living. But at some point of raiding the salaries of the middle class and working class to inflate the salaries of the most wealthy, it gets out of hand. Should we for instance, over the next 30 years seek to double or triple the real incomes of the upper 1% while giving 90% of Americans a 25% cut in their share of the national income pie. No? Why not? Don’t the rich deserve more than other common folks, due to their more effective effort, and indeed, do they deserve just as much as they can manipulate into their bank accounts by any political and economic means they can muster?

How about if you give 75% of all national income to the upper 1% and split the rest among every one else. When is it too much?

From 1980 to today, with a couple of hiccups after 2000 and 2009, the richest 1% went from receiving about 10% of all income to about 23% of all income, a 130% increase. The lower 90% went from receiving 66% of all income to 50%, which is about a 25% decrease. Last time it got this bad in 1929 and we know how things went after that.

AND why should the rich, especially the million earners, whose real inflation adjusted salaries have more than doubled in 35 years complain if an additional 10 or 15 or 20% gets pulled from their income? Would you take that deal? Let’s say someone is going to double your income, whatever it is, and then take back 20% of total income, which is 40% of what they added to your income. Would you take the deal? Of course. you still have a 60% pay increase. Would you then complain about the taxes instead of rejoice at your prosperity?

Reply

Nat December 2, 2015 at 11:36 am

These are tough questions you ask that don’t have any clear, provable right or wrong answer. In fact there are likely many different “right” answers for different situations. A large struggling publicly owned company perhaps should hire as much of a “sure bet” stellar CEO to turn the company around, thus preventing the possible loss of jobs for the thousands of employees of that company sbould it go belly-up. The CEO’s being considered for the task may be reluctant to take on the challenge because of the increased risk of failure since the company is already struggling. Since the company is desperate for stellar leadership, the stakes are high, and the potential candidates are sparse, th3 compensation offered would likely be very high.
Top-down / central planning type questions that you’re asking like “Should we for instance, over the next 30 years seek to double or triple the real incomes of the upper 1%…” are going in the wrong direction and sugfesting that one size fits all decisions should be made to limit the pay of upper management. The market is best suited to make these decisions.
Speaking of “the market” making decisions conjures thoughts of greedy rich old Republican men smoking cigars and cackling as they count stacks of gold bars, but in reality what “the market” would be in this example is the board of directors seeking to hire the new CEO, and the candidates available that might have the ability and willingness to take the position. The board has the best interest of the company in mind and the candidate has his or her interests in mind while negotiating pay.
If the desired candidate refuses, for example $5MM/yr because they can get $6MM/yr elsewhere, or maybe can get $5MM/yr elsewhere with a more successful company, shouldn’t they choose the better option?
And if the board of directors could hire another candidate that is just as promising for a lesser amount, say maybe $1MM/year, wouldn’t they? The market handles pricing for specific situations at particular points in time far better than third parties can by trying to figure out some ambiguous one-size-fits-all formula for “how much is too much”.
And if you have your retirement funds invested in one of these publicly traded companies don’t you want it run by the candidate that the board of directors found to be the best value proposition?
…Sincerely, a rich old greedy Republican man cackling whilst counting my bars of gold. Buahahahaha!

Reply

Dynx December 14, 2015 at 7:35 pm

Here’s the other side as a well paid employee. I bring in millions(2.7 to be exact last year. They don’t pay money without knowing what they are getting)…why would I take less? Sure my salary has gone up over the years but that’s because I can demand more. I work in the medical field so let move it to something more closely related to your point.
My buddy from college is in corporate tax law. He makes a lot more than me. He demands a high salary. He studied law and is very good. Recently, he argued and won a challenge that saved his company millions. So, should he be paid in the top .1%? Yeah, that’s less than he directly made his company. His secretary may not have gotten a raise in who knows how long. Who cares? She can be fired and anyone with a HS degree can file his schedule etc (it’s a shame that now you need a 50k BS degree to get the job but that’s the governments fault for screwing education). Anyway….would it be fair to tax him 10% more? Sure why not? But he’s in demand. He would (and has) said “well, taxes went up, now I need x dollars more or I’ll leave”. And people will hire him. That’s how it is. I bill more than 5 times my salary. I like where I live but I’m not stupid. The take home goes down I’ll up and leave. Someone will pay me at 25%, it’s just the activation cost of moving. That’s where income growth comes from. That’s why salaries for high level people go up. We make the money. The marginal benefit of us staying gets reduced we leave. And frankly a lot of the benefit we provide is snaking through the gov. Trying to squeeze money out of corporations that have a lobby and lawyers that are a lot…lot…lot smarter than senators

Reply

James December 15, 2015 at 11:17 am

Would be nice for Steven H to try and address these points of view. Love the point about analyzing this from the top-down being so misguided. Well said!

Always nice to hear from people like you guys and Peter, Ken, etc. throughout this thread who have real-world business experience.

Steven H December 15, 2015 at 10:02 pm

Nat and Dynx,

Thank you for your comments. I really do understand the negotiating advantage of a scarce resource like a good surgeon or a cover corporate lawyer, and how their salary is increased by demand and competition. I think the point you are missing is the instability of a market or a company or a country when such concentration of negotiating power is allowed to accumulate among a small population at the expense of the larger population. The attitude stated by Lynk is classic:
“That’s why salaries for high level people go up. We make the money.” “His secretary may not have gotten a raise in who knows how long. Who cares?”
Isn’t the entire corporation required in order to make money, including the secretaries? Aren’t patients with income required in order for doctors to make money? If you neglect the incomes and economies of the customers in the equations, then you ignore the largest part of the economy. When the wealthiest people start believing that only they are worthy of raises and that only they “make” the money, that is the time to bring reality back into play.

Democracy was established for a reason: to prevent the tyranny of “the general prey of the rich on the poor”, as Jefferson said. When power and wealth become too concentrated among a financial and political elite, the people can vote to establish policies to return the people’s wealth to the people. That is not, as some would claim, an un-American concept. It is the very heart of the philosophies put forth by our founders. Madison, for example, said “The great object should be to combat the evil [of factions]: 1. By establishing a political equality among all. 2. By withholding unnecessary opportunities from a few, to increase the inequality of property, by an immoderate, and especially an unmerited, accumulation of riches. 3. By the silent operation of laws, which, without violating the rights of property, reduce extreme wealth towards a state of mediocrity, and raise extreme indigence towards a state of comfort.”

The solution to unbounded demands for salary is simple, and often used in the last century. Extraordinarily high marginal rates for extraordinary income. Some have discredited the usefulness of 90% marginal rates on high incomes because “nobody paid those rates”. But that is indeed the point. What is the use of demanding double an already extraordinary salary if you know that 90% will go to taxes? Such policies can put a much-needed brake on the demands for $10 million plus salaries (for instance).

Power and negotiating strength is indeed the driving force to increase salaries. This is why we need a resurgence of labor bargaining entities such as unions, or perhaps the German model which puts labor representatives right in the company board of directors.

The rich really don’t “make” all the money. Put a bunch of lawyers in the wilderness and all you will have is high-minded conversations about starving to death. The workers who actually DO something make the money.

Reply

James December 16, 2015 at 6:39 am

Those with the talent will always have the “negotiating power”. No amount of government policy is going to change that. Ever.

And nobody with any sense is seriously proposing/considering taxing ANYONE at 90%.

And no – patients with income are no longer required for the doctor to make money since our government is now paying people’s medical bills for them.

Steven H December 16, 2015 at 10:49 am

James, people of talent and skill will always and should always merit a higher salary. The issue is always how MUCH higher. Only a fool would advocate to keep increasing wealthiest incomes at nearly double the percentage increases of everyone else. And yet the GOP candidates propose this.

Do really want this country to devolve into a wealthy overclass and impoverished underclass as the middle class shrinks? That is where we are heading if we don’t fix this.

What is your solution?

James December 16, 2015 at 12:27 pm

My solution is to maintain that the government has NO SAY WHATSOEVER in what a private company or business owner chooses to pay their employees. (other than setting a minimum wage)

Therefore I don’t want the liberals trying to prevent higher salaries for CEOs or whatever wealthy successful people you abhor – NOR do I want the GOP proposing that we raise CEO salaries.

I’m not going to go back over all the other more reasonable and practical solutions again in detail but they include changing the education system to enable technology workers, incentivize keeping jobs in the US, training and mentorship programs, small business owner tax breaks, revising the crippling ACA and other entitlement spending costs that choke mid-level payroll.

Nat, Dynx, Peter and whomever else should make as much money as they can. They deserve it. And I don’t care how much it is relative to their secretaries. Or how much more a basketball player makes than a hot dog vendor at the same game. Deal with it and go develop your talents so you can be paid as well.

The problem is with the unskilled/untalented. There are much fewer jobs for them anymore with technology and shipping jobs overseas. The only choice is to train them for the 21st century – not to hand them other people’s money or give them undeserved pay raises (like Tiffany pointed out above). But I’m sure you disagree. Until you get money taken away from the ‘rich’ you will not be happy. I think you should admit that once and for all. You will accept no other solution.

Steven H December 16, 2015 at 7:28 pm

“My solution is to maintain that the government has NO SAY WHATSOEVER in what a private company or business owner chooses to pay their employees. (other than setting a minimum wage)”
— Glad you acknowledge need for minimum wage.
— I don’t want the government saying what a company pays their employees either, beyond minimum wage, and of course setting certain labor policies like the 40 hour work week, definition of exempt/non-exempt, restrictions on child labor, and setting union policies. But having government micro-manage salary is not what I am advocating.

“practical solutions again in detail but they include changing the education system to enable technology workers”
— Agreed. Requires government oversight and investment in the education system.

“… incentivize keeping jobs in the US”
— Agreed. Requires sound government trade policy and tax incentives.

” … training and mentorship programs, small business owner tax breaks”
— Agreed. Also requires government policy changes for the tax breaks and to incentivize good business behavior.

“revising the crippling ACA and other entitlement spending costs that choke mid-level payroll”
— Single payer healthcare would be cheaper and alleviate a lot of paperwork on small business. As for SS/ Medicare and Medicaid, they are popular, unlikely to go away, and not as much of a burden on the country as some would claim.

“Nat, Dynx, Peter and whomever else should make as much money as they can. They deserve it. And I don’t care how much it is relative to their secretaries.”
— You should. Study history, especially the Gilded Age. Those who don’t know history are doomed to repeat it. Capitalism does not self-balance. Well-regulated capitalism can be balanced. Deregulated capitalism is a disaster.

“The problem is with the unskilled/untalented. There are much fewer jobs for them anymore with technology and shipping jobs overseas. …”
— What about plumbers, secretaries, teachers, firefighters, house-builders, architects, janitors, cleaning-people, restaurant owners and workers. We still need these people, and they still need a living wage. You can’t just say these people should get a different job to make more money. We need people in these jobs. Middle and working class people need a raise. And the problem is NOT with the unskilled/untalented, it is with the underpaid and overworked. This is the problem with high income disparity.

Steven H December 16, 2015 at 7:44 pm

I hate typos. My post to Nat and Dynx misstated Dynk’s name as Lynk at one point and referred to cover attorneys instead of clever attorneys. And there was a third one, what was it … Oops.

Sam January 16, 2016 at 5:36 pm

I am a physician and I make over 400k a year.
However I spend over 18 yrs of my life- which is half my age ,in training and education.
Over and above I work over 80 hrs a wedk which incldes every other wefkend and every other major holiday.
I believe I get paid less compared to my level of training and the amount of time and effort I put in my job.

Will be glad to work for less money if I can get all weekends and major holidays to spend with my family on top of 4-6 weeks of paid vacation that an average american like yourself gets.

Sam

Daniel M January 17, 2016 at 9:35 pm

Steven H you are simply wrong. You side stepped the fact that there are more secrateries than CEOs available. Supply and demand. You sir are simply uneducated.

Irrational Exhuberance December 28, 2015 at 11:27 am

Trickle down economics has been proven without any doubt in academia, looking at historical data as well as projecting it, to fail. The rich qet wealthier a lot faster than the not wealthy in scenarios where taxes are lifted on the wealthy. Most wealth built is built in higher returning investments in any said year! You think a CEO is going to plop more money in their company when they can get a nearly 50% gain in real estate in hyped cities where their large behemoth company is planning to open offices and create new jobs? You’re sadly mistaken and while I think Reagan was a great statesman, this was his folly. Trickle down economics is a myth. I know the reality — I did the same thing, you invest where the returns take you long or short.

Besides if you did your homework, you’d realize that a majority of the gain in wealth and these CEO’s and Surgeons came not from their massive pay checks which are taxed right in my book, the deductions however I’d argue with. Where did their wealth come from recently? Homes. Yes you read that right — real estate. If you could have afforded real estate in Seattle during the crash, and be able to pay the taxes and hold on just a little bit, you’d have a ton of cash today. Most folks couldn’t do that save for the Amazon Execs, Microsoft Execs, Zillow Execs and executives at many companies in Seattle that are just as corrupt as execs planning games for FIFA and the Olympics.

Reply

Steven H January 10, 2016 at 7:40 am

Thank you for a fine post, Irrational Exhuberance. I hope it’s OK that I reposted it part of it down lower on the thread where it will be seen. I almost didn’t see it up here.

Reply

Steven H October 6, 2015 at 6:25 pm

Last one, bookending with another MOR post:
===============
Man-of-Reason January 24, 2013 at 12:57 pm

Not every business owner is greedy or unfair to his workers, nor every worker who doesn’t make enough to pay taxes, a “freeloader” or spendthrift. All of that is mutually exclusive.

The enmity between employees and their employers can only be mitigated through communication which fosters trust. Yet, we are deliberately limiting the ability of employees to be heard as more states pass “Right to Work” laws or eliminate the ability of workers to negotiate wages and benefits.

Without the benefit of communication between all associated humans, a business becomes amoral as opposed to moral or immoral. Amoral is considering the bottom line and competition in the marketplace and excluding the consequences to the lives of real people. Cigarette companies, old time slave holders, and even the Catholic Church have be good examples of that. It is very difficult for corporations to consider anything other than the bottom line and therefore, we form governments, not only to protect us from external threats, but also from internal threats from amoral interests which have no responsibility to promote the public interest.

When a man can’t tell his employer why he thinks he has more value than reflected in his wage, or such statements fall on deaf ears, he will feel exploited regardless of your opinion. To say that exploitation doesn’t happen, or that it’s simply a complaint of young spendthrifts to justify not being promoted or achieving your level of success, is a red herring which has no bearing on the subject. You see, Thomas Jefferson was a spendthrift also and managing money is a weakness for many across class lines.

The fact is that currently the U.S. has a problem with the growing gulf between wealthy and middle class. The fact is that tax favorable legislation for the wealthy, reduced regulations on corporations, reductions in union representation for workers, and reduced benefits to our safety nets, have all contributed to a distrust of government to represent the interest of all citizens. The fact is that “greed” did contribute a great deal to the current recession and debt crisis we are now faced with.

Reply

Steven H October 8, 2015 at 4:32 pm

A couple of posts tonight. First is regarding straw man arguments.

The Straw Man fallacy is committed when a person simply ignores a person’s actual position and substitutes a distorted, exaggerated or misrepresented version of that position.

The idea of course, is that it easier to refute a fake straw man argument than an actual argument. In today’s political environment however, it seems to many observers that the GOP stands up a bunch of arguments as false and fragile as any straw man and which are easy to refute, but which they stand behind none-the-less, continually stuffing the straw back in as best they can. Such as the following political and economic arguments:

1) Seven Benghazi investigations costing $14 million found no significant governmental wrongdoing but we need an 8th one costing $4.5 million (so far) to figure out what really happened and it is not a political witch hunt.
2) Accusations against Planned Parenthood are clearly based on heavily edited undercover videos which misrepresent what actually happened, yet despite multiple state investigations that have found no wrongdoing, we need a congressional select committee to investigate, but this is not about abortion nor is it a political witch hunt.
3) We need more guns to stop gun violence.
4) We need more tax cuts to solve the deficit problem.
5) We need more tax cuts specifically going to wealthy people to help solve the high income disparity problem.

On that last one, which has the most relevance to this forum, that is amazingly an actual argument, as per:

====
Appearing at a candidate forum in late January, three likely Republican presidential contenders — Senators Ted Cruz,Marco Rubio and Rand Paul — all made a striking confession: They considered “the increasing gap between rich and poor” to be a problem. But on the question of whether the government should intervene to solve it, Mr. Cruz and Mr. Paul rejected that approach, and Mr. Rubio appeared to agree with them. When “government takes over the economy,” Mr. Cruz said, “it freezes everything in place. And it exacerbates income inequality.” He proposed lowering taxes and loosening regulations instead. …

Jeb Bush, arguably the most outspoken potential Republican candidate on the subject, has struck much the same posture as his more conservative rivals. “We believe the income gap is real, but that only conservative principles can solve it by removing the barriers to upward mobility,” Mr. Bush wrote when announcing the formation of a political action committee this year. Mr. Bush vowed to “celebrate success and risk-taking, protect liberty, cherish free enterprise.” … It’s not just right-wing presidential aspirants like Mr. Cruz and Mr. Paul whose statements on inequality diverge from public opinion.
====

The Democrats don’t need to create straw men when the GOP does it for them. The mystery is why the GOP actually believes any of these arguments can have any credibility. And why we let them get away with it.

Reply

Steven H October 8, 2015 at 5:07 pm
Steven H October 8, 2015 at 5:03 pm

This is a test. Debt Ceiling Silly Season is approaching and everyone needs to understand some facts about the debt ceiling so they can follow the news stories. Based on news reports so far, some of our potential Presidental Candidates would fail this test. So test your knowledge and answer the following True or False.

1) Raising the Debt Ceiling authorizes new government spending.
2) Raising the Debt Ceiling authorizes governmental borrowing in order to pay financial obligations that have already been incurred.
3) The government can prioritize important bills and deprioritize less critical bills to avoid default and stay under the debt ceiling.
4) Government systems are set up to pay bills automatically millions of times per day, when they come due, and their is no legal, technical, nor practical mechanism that exists to allow bill payment prioritization.
5) Defaulting on our debts due to a refusal to raise our debt ceiling will help the US credit rating by showing we are serious about debt reduction.
6) Defaulting on our debts due to a refusal to raise the debt ceiling would create a catastrophic reduction in our credit rating and US financial credibility, along with an increase in our interest rates for borrowing.
7) Limiting the debt ceiling will reduce the deficit.
8) Limiting the debt ceiling will simply postpone payments that must eventually be paid, possibly result in default, and possibly raise our interest rates on borrowing, all of which ultimately increase the deficit.

Answers tomorrow, but I think most people can figure this out. Not sure about Ben Carson.

Reply

Steven H October 8, 2015 at 5:14 pm

Let me add two more:
9) You have to cut raw dollar federal spending and reduce the raw National Debt value to control debt long-term. Our goal should be to eliminate the National Debt completely.
10) You can control debt, with the least negative impact on economic growth, by maintaining an annual deficit that is a bit less than annual GDP growth. Setting a policy of true budget surpluses and eventual debt elimination is counter-productive and will result in excessive taxation, and constriction of economic growth.

Reply

Steven H October 9, 2015 at 6:04 pm

The solutions are easy. Odd numbers are false, evens are true. But you already figured that out, right?

Reply

Steven H October 9, 2015 at 6:14 pm

I find it remarkable that I put all those posts on the previous page showing how the experts in economics backed up my assertions on the best way to pay down the national debt, and that aiming for surpluses and paying down the dollar debt was not the way to go. After all of the insults and complaints I got telling me I was being partisan and naive and that I needed to take an economics course to understand how things really work, there is a deafening silence when I show that the people who would teach such an economics course back up my assertions. No comments? I guess I was finally persuasive and convinced the doubters…

Reply

John Dillinger CPA October 12, 2015 at 8:48 pm

Believe it or not in San Francisco $450,000 a year for professional couples is barely enough to make ends meet! Marginal tax rates should take cost of living into consideration.

Reply

Peter October 13, 2015 at 6:48 am

More than 1/3 of the top 1% income earners live in four metro areas – NY/NJ, DC metro, LA and SF. All places where it is extremely expensive to live.

Reply

JTM November 13, 2015 at 5:11 pm

Could you please explain how they “barely make ends meet”. Even in these areas, there are many who make less than 100k/year. I would posit that their choices, especially towards what their living quarters are, make it hard to make ends meet. What other expenses are so detrimental? Though they may not like it, they could easily choose to live differently, like those who make much less, and they wouldn’t be under so much financial pressure. But, you know, keeping up with the Jones’s and all…

Reply

Tiffany Sparkles November 18, 2015 at 10:53 am

God forbid someone doesn’t have a smart phone, for example. Or a car. Or a flat-screen TV. These are now “entitlements”, not “luxuries”.

Reply

Steven H November 18, 2015 at 8:13 pm

Or heaven forbid they should cook in a kitchen instead of eating out.

Reply

Steven H November 18, 2015 at 8:11 pm

And yet these same $450K/couple people would vote against $15/hr minimum wage, which is about 7% of that “barely make ends meet” household income. Do you see some irony here?

Reply

Tiffany Sparkles November 19, 2015 at 6:57 am

I would vote against that too. Would have to cut back my employees if that were to happen. Would rather just pay my employees who deserve it more than minimum wage than have to pay everyone $15. Imagine many other small businesses would have same problem.

Reply

Steven H November 20, 2015 at 9:32 am

So you have sympathy for a household earning $450K a year, but you couldn’t care less about a minimum wage household with a single minimum wage worker earning $15K a year, who feeds and serves those $450K earners. Seems rather harsh.

Reply

Tiffany Sparkles November 20, 2015 at 10:18 am

I have sympathy for everyone. But that doesn’t mean I just want to double people’s income for no reason. To be honest, if I have 6 employees making $7/hour and minimum wage goes up to $15/hour I would probably go down to 4 employees just to make the costs work. And 4 people get their income doubled for no apparent reason whatsoever and 2 people now have no job at all. And what about those that have worked their way up to make $40/hour? How are they going to feel if the lesser employees get 100% raises and they get nothing? Bad business for me and kind of a nonsensical suggestion.

Steven H November 20, 2015 at 7:59 pm

OK, how about raising from $7.25 to $10.10? This proposal is a couple years old, but did you know …?

The Fair Minimum Wage Act (H.R. 1010) will increase the minimum wage in three steps, from $7.25 to $10.10 per hour. The rate will then be indexed to inflation each year thereafter. In addition, the legislation will increase the required cash wage for tipped workers in annual 85 cent increases, from today’s $2.13 per hour until the tip credit reaches 70 percent of the regular minimum wage.

Business for a Fair Minimum Wage (July 2014): 61 percent of small business owners with employees strongly favor raising the national minimum wage from $7.25 to $10.10 and adjusting it to keep up with the cost of living in future years.

Small Business Majority (3/6/14): Small Businesses Support Increasing the Minimum Wage to $10.10

Wall Street Journal/ NBC (12/11/13): 63 percent of Americans support raising the minimum wage to $10.10 from the current $7.25 rate.

Quinnipiac Poll (12/10/13): American voters support 69 – 27 percent, including 49 – 44 percent among Republicans, raising the minimum wage. No group is opposed.

National Journal Poll (12/17/13): 71 percent of Americans support raising the minimum wage.

ABC News/Washington Post poll (12/18/13): 66 percent of Americans support raising the minimum wage.

Steven H November 20, 2015 at 8:02 pm

And the increase is not “for no reason”. It is due to the fact that minimum wage has steadily declined by inflation, causing people to work harder for less money “for no reason”. In other words, the very good reason is to help restore the working and middle class and build up the customer base that every small business owner needs to have as a market. One person’s employee is somebody else’s customer.

Tiffany Sparkles November 23, 2015 at 10:58 am

So I should tell my foremen that have worked their way up to a $15-20/hour pay scale that I’m giving the laborers raises to equal the pay of a foreman because “minimum wage has steadily declined by inflation” and that I’m trying to “restore the working (offensive term by the way) class”??? Wonder how that will go over? I think the foreman think they are part of the working/middle class too. Hell, I think I am as well. Maybe we should all get raises.

PhilosoFred November 11, 2015 at 7:33 pm

I guess I don’t understand why most or all of the Republican Presidential candidates want to give even more big tax cuts to the wealthiest people when (a) it will balloon the deficit, and (b) income inequality is already a threatening the well-being of the country. Wouldn’t it make more sense to boost taxes to pay down the deficit, or at least, if tax cuts are affordable, to just give them to middle class where it is needed?

Ballooning the deficit and crushing the middle class hardly seems like conservative principles. Aren’t the Republican candidates just trying to give away free stuff to their donors? That’s certainly what it seems like.

Reply

Tiffany Sparkles November 12, 2015 at 9:46 am

Rand Paul doesn’t want to balloon the deficit. The problem is the Republicans want to give away free stuff to their base(tax breaks) and the Democrats want to give away free stuff to their tax base (higher entitlement spending). It’s all the same song and dance – both sides of the aisle – year after year after year after year. We are DOOMED

Reply

Tiffany Sparkles November 12, 2015 at 9:47 am

And neither reduce the deficit. If you want that, you vote for Rand Paul.

Reply

PhilosoFred November 13, 2015 at 8:45 pm

Tiffany, rand paul’s tax plan, as I undetstand it, is a flat tax with a $50k deduction which gives it some small progressivity, but less than the current tax policy. Plus it adds a VAT tax. Both amount to more tax burden on the middle class than the rich. And it counts on cutting government programs that serve the poor and middle class in order to make up the shortage of the tax benefits that go to the rich. So once again, its frer stuff for the rich, and crushing the middle class.

How about a plan that balances the budget without taking anything away from the middle and poor and without giving one more dollar in tax breaks to the rich, since they absolutely do not need it?

Not politivally likely is it? Not as long as the rich folks grt to buy our politicians.

Reply

PhilosoFred November 13, 2015 at 8:49 pm

Sorry for the phone typos …

Reply

Tiffany Sparkles November 14, 2015 at 8:05 am

Actually he wants to cut spending across the board – everywhere including the military. Not targeting the poor or middle class at all. He also simply wants to pass on most of these Federal costs to the states. I don’t love flat taxes, but he does propose that we eliminate the payroll tax which is a huge benefit to the poor and middle class. The reduction of taxes on small businesses would also be a huge benefit to the poor and middle class. And most specifically it removes EVERY special interest tax break and loophole.

Reply

Tiffany Sparkles November 14, 2015 at 8:07 am

Oh and no VAT tax in his proposal…. Reading some of the past posts I am guessing the PhilosoFred is Steven H….am I right?

PhilosoFred November 14, 2015 at 11:07 am

http://www.thefiscaltimes.com/Columns/2015/07/08/Here-s-Why-Rand-Paul-s-Flat-and-Vat-Taxes-Are-Economy-Killers

I only know what I read about Rand’s tax proposals. This article says it has a VAT tax or something like it. The article, which seems to actually like the flat tax idea, still thinks it won’t work. It just seems to me like a complicated plan to hide that you are shifting more money from poor to rich.

The article says…
“In addition, Paul proposes a 14.5 percent “business activity tax” that would operate much like a European Value Added Tax or VAT. Despite its widespread popularity among OECD nations, VATs serve as a pernicious form of taxation, harming American consumers through increased prices and broader tax bases.
Unlike a conventional sales tax that is only charged at final sale, VATs are charged in small amounts along the entire supply chain. Ironically, the “business activity” component of Paul’s proposal will be primarily borne by consumers, as corporations charge higher prices to customers in order to shoulder increased costs. …
when combined with the 14.5 percent business activity tax, it will not lower rates as much as advertised. The tax rate on income that is spent, rather than saved, will be 29 percent, not 14.5 percent.”

And no I am not Steven H.

PhilosoFred November 14, 2015 at 11:21 am

Tiffany, I can see the appeal of the Paul tax plan if you don’t look too deep. A $50K earner would pay no income tax and no payroll tax. A 100K earner would only pay 14.5% on half his income. And no matter how much you make, you pay no more than the 14.5% on your income. But how can this possibly work? How can everybody pay less?

Cutting the military? With ISIS attacking Europe? Blindly cutting government agencies? This seems naive to think it is just that easy.

The business/VAT tax apparently makes up the difference and increases costs on everything. Since poor and middle class spend more of their money, they ultimately pay more of their income into the flat and VAT.

Money for government has to come from somewhere. If the rich pay less, everybody else pays more. So beware any tax plan that rich people are trying to sell you.

PhilosoFred November 14, 2015 at 11:25 am

And Paul’s tax plan is estimated to cost $1 trillion over 10 years, ADDING to deficits and debt, even after rather optimistic business growth projections.

PhilosoFred November 14, 2015 at 11:56 am

I’m trying to be fair so I looked up another article, this one from the Tax Foundation, which is supposed to be non-partisan, but Wikipedia also describes as friendly to business and conservatives. It says the Paul plan will cost $1.8 trillion over 10 years and it gives a table of benefits to various income groups under “static” and “dynamic” economic assumptions. Under dynamic assumptions, most people get a 14% to 15% increase in after tax income, but people making more than 1 million dollars get a 27% increase in after tax income. 27% increase!!!! No wonder the millionaires like this plan.

http://taxfoundation.org/blog/economic-effects-rand-paul-s-tax-reform-plan

Since purchases will presumably cost more due to higher prices from the business tax, this erodes that income increase for most folks. And since the tax won’t pay for itself, it would probably have to be higher than 14.5% anyway just to avoid a ballooning debt. There is no real guarantee that anyone making less than a million dollars will benefit from this deal.

PhilosoFred November 15, 2015 at 8:21 am

It’s interesting looking up the details of Paul’s Flat/VAT taxation plan, but it just proves what I originally stated. Paul’s plan, which is actually less debt-ridden than some of the others in the GOP, still primarily (or only) benefits millionaires, and just makes the income inequality problem even worse, as do all of the Republican plans. It could possibly be fixed to be revenue neutral, but the basic structure is flawed: giving free stuff to millionaires at everybody else’s expense. All flat tax plans are structured this way. Since Republicans, even more than Democrats, are dependent upon rich donors, this is completely expected.

As for the proposals of the Democrats, they are also too expensive. USA Today “Making College More Expensive” thinks the Democrat proposals for free or lower cost tuition generally are not addressing the full problem, or not in the right way.

The Republicans oversimplify the problems of government and taxation by claiming they will slash entire government agencies, which they cannot and will not actually do. The Democrats oversimplify the problems by claiming they will vastly increase taxes on wealthy to pay for all of their big plans, which they cannot and will not do.

Are we DOOMED?

No. But we need to have more nuanced solutions. No one thinks that the politicians in either party will do be able to accomplish all of their goals. But we need to at least move in the right direction. Small business needs to be boosted, which may require better tax incentives and some regulation streamlining. Taxes need to be made more progressive, not less, to have upper incomes help close the gap on our deficit without costing the middle class. Something needs to be done about our too-expensive higher education system beyond throwing federal dollars as tuition subsidies and loans. We at least to restore the old policy of carefully price-controlled state colleges which kept private tuition down through competition. We need to keep improving the ACA, not throw it out the window.

Neither party has all of the answers. But it at least looks like Democrats are aimed in the right direction of trying to help the middle class directly. The Republicans are still claiming they will help the middle class by giving middle class money to the upper class. That has not worked very well in the past, and I don’t think it will in the future.

Reply

Steven H November 17, 2015 at 7:01 pm

Nice posts, PhilosoFred. Welcome aboard.

Reply

Martin November 16, 2015 at 6:37 am

Not sure how someone could have the perspective that the Democrats are trying to help the middle class. Sure that’s what they say but their policies – particularly those of the establishment like Hillary – say otherwise. Hillary’s palms are as greased by the rich as any republican.

Reply

Steven H November 17, 2015 at 7:28 pm

Martin, what policies of Hillary’s would hurt the middle class?

Reply

Steven H November 17, 2015 at 7:21 pm

Martin, as a Democrat, I too am worried about Hillary’s ties to big banking. And unlike Bernie, she has a SuperPAC. But if I am looking for someone to
promote legislation and appoint Supreme Court judges to
(a) reverse the dangerous impacts of Citizens United ruling
(b) restore the Voting Rights Act
(c) enact sensible tax policy that increases marginal rates on millionaires instead of giving them even more wasteful government subsidies and tax breaks
(d) respect science and address global warming
(e) respect the freedom and liberty of women to make their own medical decisions
(f) strengthen labor policies like minimum wage and unions
(g) have a fair and equitable immigration policy

… then Hillary is really the only viable candidate to vote for.

If you instead want to allow continued massive corruption of government through “donations” of the rich, to bankrupt the government with big unfinanced tax giveaways to millionaires, to erode the voting rights of the young, poor and elderly, to ignore science, to control and micromanage women as if they are too stupid and immoral to make their own decisions, to force the poor and middle class to struggle with declining wages and unmanageable student debt, and to march 11 million immigrants naked back across the border, then go ahead and vote GOP. They’re your guys. But I hope you don’t really want to make that choice.

Reply

Martin November 18, 2015 at 8:27 am

That’s a bit of a slanted view of the Republicans, I must say. Clearly we all know what side you are on! I’m surprised that you think Hillary would stop “massive corruption of government through donations of the rich” or not “bankrupt the government”. Even if somebody likes Hillary, I’m not sure how they would think she would not do these two things. As a democrat myself, Hillary would be very hard to vote for.

Reply

Steven H November 18, 2015 at 8:00 pm

OK, granted, its a bit of a caricature of the GOP. Yet, to be honest, the rightmost elements of the GOP are a bit of caricature when viewed in broad daylight. Trump? Carson? Cruz? God help us if any of these nuts were to lead the nation.

As for Hillary, I think she is a lot less likely to bankrupt government than any of the GOP. To the best of my knowledge, every single GOP candidate who has a tax plan intends to cut taxes in such a way that deficits will skyrocket and most of the giveaway goes to millionaires. This is dreadfully bad planning for the economy. They CLAIM to want to cut government, but if history is any teacher, they will not follow through with the latter sufficiently to fund the cuts in revenue. Cut taxes now; fail to cut government later; reward the donors first. That’s the policy.

Hillary at least has motivation to reward the middle class and not millionaires primarily. And she can raise taxes as needed to bridge the deficit without getting flak from her base. Not true of GOP. And yes, I think she would advocate for reversal of Citizens United. Do you think GOP would?

I support a lot of Bernie’s ideas. Is that who you prefer? Not a bad choice. I just worry that a labeled Democratic Socialist cannot win and that he doesn’t have the breadth of experience that Hillary can bring to the job.

Reply

Steven H November 18, 2015 at 8:06 pm

Or is that you, O’Malley?
😉

Reply

Martin November 19, 2015 at 7:44 am

That’s awful naive to give Hillary the benefit of the doubt but not the GOP. They are all the same when it comes to this – just different rhetoric. And if Trump, Carson and Cruz are “nuts” then Bernie Sanders is like Chex Mix! One thing I like about Trump and Sanders though is that their campaigns are not funded by Super PACs. That’s 90% of the problem right there.

Reply

Steven H November 19, 2015 at 7:45 pm

So you are a Democrat who can’t seem to fathom voting for any Democrats for President? You never answered why Hillary would be hard to vote for.

Reply

Steven H November 19, 2015 at 8:25 pm

And I give Hillary the benefit of the doubt because she is running to support the middle class. At least, if she is politically pandering, she is pandering to the middle class, a group that needs some pandering to at this point in history. The GOP is pandering to millionaires who already have historic highs in wealth and income share. They don’t need more.

And yet, each of the GOP tax plans that have yet been put forward reward millionaires with higher percentage increases in after tax income (20 to 30%) than the middle class (10 to 15%), according to Tax Foundation. And they all increase deficits (except possibly Rand Paul’s if you believe the dynamic projection … but his also raises product costs for consumers with his business/VAT tax, as PhilosoFred pointed out above).

If the United States is to be judged as a business, why should it invest most heavily in tax cuts for the millionaires who already have hoards of capital, and short the middle class who are starved for disposable income which actually fuels the economy. Every single GOP candidate is pandering to millionaires and ignoring the working Americans who both need and deserve a boost in income. This is why I do not give GOP benefit of doubt. Because I have no doubt that the more Republicans who are in office, the dimmer this country’s economic and social future will be.

Reply

Martin November 20, 2015 at 10:05 am

I guess I don’t have the disdain for the millionaires of the country that you do I suppose. I do have disdain for dishonest leadership – and I just view Hillary as someone that will say whatever she needs to say to further her own political career – and yes, as someone who is driven by money and her Super PACs (i.e. millionaires) rather than by the American people at large.

So no, I can’t see myself voting for any of these Democratic candidates. Once again, we have another tough decision to make between lots of unlikeable options.

Reply

Martin November 20, 2015 at 10:07 am

And Trump, Carson and Paul aren’t pandering to millionaires. Whether you like them or not, that isn’t true at all. Paul is practically a libertarian, Trump is paying for his own campaign and if Carson is pandering to anyone, it is the religious right.

Reply

Steven H November 20, 2015 at 7:27 pm

dis·dain
dis?d?n
noun
1.
the feeling that someone or something is unworthy of one’s consideration or respect; contempt.
“her upper lip curled in disdain”
synonyms: contempt, scorn, scornfulness, contemptuousness, derision, disrespect; More
======
I don’t have disdain for millionaires. I just don’t think we need to invest even MORE of our taxpayers dollars in tax breaks to millionaires when it is the middle class who have been shorted for decades.

Reply

Steven H November 20, 2015 at 7:48 pm

My definition of catering to millionaires:
Giving economic advantage to millionaires at the expense of taxpayers and/or average citizens.

According to Tax Foundation dynamic scoring (most optimistic), let’s list tax plan impact after ten years to:
(a) the projected percentage income increase to average median income Americans
(b) the projected percentage income increase to upper 1%
(c) net cost to government revenue over the 10 years (negative adds to debt)

Trump: 19.5% , 27%, -$10.1 Trillion
Paul: 14%, 23 to 27%, +0.74 Trillion (also adds business/VAT tax increasing consumer prices, as per PhilosoFred’s post up the page)
Carson: [analysis not available, but as a flat tax would give huge benefit to upper 1%]

So yes, each of these candidates are pandering to upper 1% and millionaires. Why go into debt investing in the one segment of the economy where that investment is wholly wasted? And no, I’m not saying that millionaires are a waste, but giving more and more money to the wealthiest and highest paid people on earth and in all of human history IS indeed a waste.

pan·der
?pand?r
verb
1.
gratify or indulge (an immoral or distasteful desire, need, or habit or a person with such a desire, etc.).
“newspapers are pandering to people’s baser instincts”
synonyms: indulge, gratify, satisfy, cater to, give in to, accommodate, comply with
“David was always there to pander to her every whim”

Reply

Steven H November 20, 2015 at 8:05 pm

(a) and (b) in above post were AFTER TAX income, directly impacted by the tax giveaways to the rich that the GOP candidates propose.

Steven H November 20, 2015 at 8:18 pm

“someone who is driven by money and … millionaires … rather than by the American people at large.”

That would accurately describe EVERY single GOP candidate, including Libertarian Paul and self-funding TRUMP. You don’t think Trump would seek to grease his own skids once in office and pass a bunch of costly pro-business laws that would fund him and his cronies for decades? His tax plan adds $1 Trillion/year to debt!!!! While the economy is projected/assumed to be in growth. God help us at the next downturn. Every one of the GOP wants to get in office to pass laws that cut their own taxes and those of millionaires and just presume that some benefit will “trickle down” to the average schmuck.

The following facts are proven:
Trickle down does not work. Tax cuts don’t pay for themselves. And the average American is more prosperous under Democrats.

Reply

Martin November 22, 2015 at 9:32 pm

Kind of a naive, overly simplified partisan slant really. To each their own though. Totally respect why you see it the way you do – and I’m sure many others share your sentiment.

Tiffany Sparkles November 20, 2015 at 10:19 am

It’s amazing the amount of misinformation on here. Not sure where people are getting their news!

Reply

Steven H November 20, 2015 at 7:23 pm

For instance … ?

Reply

PhilosoFred December 10, 2015 at 8:05 pm

Hi Tiffany,

Not much conversation here lately, and this is a late reply. I apologize for that, but I have to mention that you are responsible for significant misinformation here, so please give a little leeway to others, and don’t be so quick to judge others on the sins you are committing.

You said that Rand Paul’s proposals do not include a VAT tax and eliminate all loopholes. But Paul’s proposals do indeed include a business tax that most articles liken to a VAT tax, and Paul’s proposals are actually criticized for leaving the mortgage and charity deduction/loopholes in place, along with the earned income tax credit. Now I think those deductions are fine, but it is still not quite correct to say he eliminates ALL tax breaks and loopholes.

And you do not specify what posts you claim have misinformation. Mine? Whose? No one can defend their posts if you do not clarify your claim.

Reply

Peter N November 21, 2015 at 7:51 pm

All democrats do is talk about taking wealth from others. Give me a plan about generating wealth.
Democrats are lame and their leaders pander to the stupid masses.
Yes, I have disdain for liberals that only want to take but not make.

Steven H cherry so called “facts” from other liberals.
BTW, what tax breaks I have missed? My taxes of gone up not down.
I am calling Steven H out on this one.

Tiffany, if none of the 4 employees are worth $15/hr what then?

Reply

Tiffany Sparkles November 21, 2015 at 9:19 pm

They aren’t worth $15/hour now! In fact, every time we post a job we get LOTS of applicants so I know many others would love to have the job at the current $8/hour pay scale.

Reply

Steven H December 12, 2015 at 6:25 am

Peter N, the plan to generate more wealth for the country is in restoring the dominance of the middle class. With this plan we all win. Plans that continue to suppress the middle class in order to shift even more income to the wealthy is just the rich taking wealth from others. The recent tax increases you dislike are simply a partial return to financial norms that allow small deficits and a stronger economy. The tax cuts that Rebublican candidates are proposing are just pandering to the rich, and are the promise of a financial sugar rush to the money addicts. Such cuts would give a short drunken boost to the economy at the cost of a long term hangover of economic instability and government debt. And once again, all wealth creation goes to those who already have the most, while the middle class muscle of this economy withers.

We need a plan of wealth creation for the country, not just the economic elite.

Reply

Steve Davis December 1, 2015 at 10:06 am

Steve,
If you were in the top 1% what would you propose? Maybe take 50-60% of your salary instead of 40% (Current tax bracket) for redistribution (ie taxes)? Guess what, if you are making $32,500 or more in the US then you are in the top 1% for the WORLD! Congrats, you should take the difference between your proposed increase ~60% and your current tax % and donate it to the 99% in the world. What is stopping you?

Reply

Peter December 4, 2015 at 6:59 am

Good point…. “poverty” in the US is a very relative thing.

Reply

Steven H December 11, 2015 at 6:05 am

Poverty income is relative to where you live. $5000/yr is good living in some cultures but not in a US city. So your argument doesn’t really make sense.

Reply

Nina December 2, 2015 at 10:21 pm

Real Estate Agents – good ones earn at least 400k.

Reply

PhilosoFred December 10, 2015 at 8:23 pm

My earlier posts complained about the tax plans of the GOP candidates, all of which seek to lower taxes on businessmen, investors, and high-earners. I understand that the theory is this will improve the economy and lift all boats. But I also understand that this is not how it has worked, and the tax foundation analyses show pretty clearly that all the tax plans redistribute even more income to the upper 1%. Middle incomes may rise but not by much, and most plans don’t even fund the government fully, adding to debt.

It just seems to me that the party of businessmen should have a better business plan for the country. There are pretty good arguments out there that the income inequality problem is a real issue that is dragging down our middle class and our economy. There is additional evidence that government debt is a real issued that we should be using this period of growth to start reducing our relative debt burden. And yet all of these businessmen put out plans that give almost nothing to middle class while heaping vast new tax breaks on the rich, or they heap benefits on everyone by bankrupting the government. This worries me because the only real policies that Republican politicians pass reliably are tax breaks. And everything they propose is good for them and ultimately damaging for the middle class and for the country, by even the most basic analysis. Doesn’t anyone else see this as a problem?

Reply

Steven H December 12, 2015 at 6:40 am

I do. Thanks for the logical arguments. The unfortunate answer to your post is that too many businessmen follow the philosophical guidance of Ayn Rand. At some point,acting in self interest means abandoning the good of the company or the country, and just maximizing profits for individuals at the top. This is the demonic attitude that must be fought.

Reply

PhilosoFred December 10, 2015 at 8:27 pm

If the richest 1% have gained their larger income share by getting tax and financial breaks over decades while the middle class incomes have stagnated, isn’t it time for the upper 1% incomes to stagnate for a couple decades and for the middle class incomes to grow faster in percentages, not slower, than the upper incomes? Rather than grow upper incomes by 27% in 10 years and middle incomes by 10 or 15%, how about reversing those numbers?

Reply

Peter N December 15, 2015 at 9:21 am

“If the richest 1% have gained their larger income share by getting tax and financial breaks over decades while the middle class incomes have stagnated, isn’t it time for the upper 1% incomes to stagnate for a couple decades and for the middle class incomes to grow faster in percentages, not slower, than the upper incomes? ”
Name them!
The richest 1% have become richer because the Fed keeps printing currency that inflates the prices of stocks and property. The Fed must do this to keep the economy afloat. It is all an illusion. Eventually the the stock market will crash, money will inflate and become worthless. The rich will be rich only in a relative sense but they will lose the most.

“Rather than grow upper incomes by 27% in 10 years and middle incomes by 10 or 15%, how about reversing those numbers?”
Gains in the stock market or in real-estate are not income.

I have said above in previous posts why incomes for middle class America have not risen.

I can see the libtards still don’t have a plan to make people worth more so they deserve higher pay relative to machines or foreign labor. They are not interested in creating wealth only re-distributing it. That will only be a race to the bottom like currency war.

Reply

Steven H December 15, 2015 at 7:49 pm

“The richest 1% have become richer because the Fed keeps printing currency that inflates the prices of stocks and property.”
— That’s a contributor recently but not the whole cause.

“Gains in the stock market or in real-estate are not income.”
— The 27% increase in incomes projected by the tax foundation to go to the upper 1% was actual income, not stocks and property.

“I can see the [liberals] still don’t have a plan to make people worth more so they deserve higher pay relative to machines or foreign labor.”
— The middle class is already “worth more”. They just are not getting paid more. The shape of the market has been distorted to make CEOS and investors receive more than they are worth, and everyone else to receive less. We need to make the market work differently and then people will get paid their worth. We also must motivate and adjust the jobs and careers and skills of people within that economy.

Reply

Peter N December 17, 2015 at 10:45 pm

“— The middle class is already “worth more”. They just are not getting paid more. ”
Are you stupid? A person is worth more if they can find just one person that thinks they are worth more. The fact they are worth less shows that EVERYONE thinks they are worth less.

“The shape of the market has been distorted to make CEOS and investors receive more than they are worth, ”
But there is at least one person that thinks they are worth what they are getting paid. Small company CEOs get paid based on their success and pleasing many. All your middle class people need to do is please just one employer.
” We need to make the market work differently and then people will get paid their worth.”
The free market does that.
“We also must motivate and adjust the jobs and careers and skills of people within that economy.”
We agree here.

Reply

Steven H December 15, 2015 at 9:29 pm

“Name them!”
I presume you mean the tax breaks and financial advantages that favor the rich. Here are a few.

On June 7, 2001, President George W. Bush signed into law the Economic Growth and Tax Relief Reconciliation Act, the first of two “Bush tax cuts.” That measure reduced the top income tax rate from 39.6 percent to 35 percent, and reduced capital gains and estate taxes. In the 10 years after the first Bush tax cut went into effect:

The richest Americans received the most benefit from the Bush tax cuts.
$520,000: The average tax cut received by the top 0.1 percent of Americans, those making more than $3 million a year. That is over 450 times the tax cut received by an average middle-class family.
The middle 20 percent of wage earners (making between $40,000 and $70,000) received less than 11 percent of the total Bush -era tax cuts.
The bottom 20 percent (making less than $20,000) received only a 1 percent share of the Bush tax cuts; 75 percent of these low-income families saw no tax benefit at all.
The average middle-class family received one-eighth of the tax breaks that a family in the top 20 percent of income earners received while the average working-class family reaped less than one-hundredth of the average tax cut received by a family in the top fifth of earnings.

From BankRate.com (2011/2012 data, some rates may have changed but these are still benefits that have benefitted the wealthy):

Mortgage deduction: According to a study by The Wharton School at the University of Pennsylvania, mortgage interest deductions for households with incomes between $40,000 and $75,000 average just $523, while households with incomes above $250,000 enjoy an average write-off of $5,459, or more than 10 times as much.

Capital Gains: Most of the capital gains are earned by folks in the top 10 percent, and it’s even concentrated more than that. So the capital gains tax break, which is a 20 percentage-point difference in the amount of tax that is paid on those, is going almost all to the top 5 percent.” In fact, Americans with an annual income of $1 million or more, or 0.3 percent of all taxpayers, enjoy 70 percent of the capital gains benefit. The favorable capital gains rate is expected to save the wealthy (and cost Uncle Sam) $38.5 billion for fiscal 2012, according to the Office of Management and Budget.

Inheritance: Under special Internal Revenue Service inheritance rules, when you inherit assets such as stock, real estate or a closely held business, you are allowed to step up their basis — what the deceased originally paid for them — to their current fair market value. Therefore, when you sell the assets, you would only be taxed on their gain in value from the time you inherited them. Step-up in basis is expected to save the wealthy (and cost Uncle Sam) $61.5 billion for fiscal 2012, according to the Office of Management and Budget. “Not surprisingly, this tax expenditure overwhelmingly benefits those who inherit from large estates because it allows gains to escape capital gains taxes if held until death,” says Hanlon.

Retirement Plans: Since the wealthy have more to save, they tend to reap more of the tax benefits of saving for retirement. According to the Tax Policy Center, the top 20 percent of income earners enjoy 80 percent of the tax write-offs for retirement saving while the bottom 60 percent take advantage of a whopping 7 percent of the tax savings.

Charity: The problem with the charitable deduction is similar to the mortgage income tax break: The value of the deduction increases with income. “If I give $1,000 to charity and I’m in a 10 percent tax bracket, I get $100 back on my taxes,” says Wilkins. “But if I’m in a 35 percent tax bracket, I get $350 back from the federal government.”

Reply

Peter December 16, 2015 at 12:47 pm

I had to come back just as an “expert witness” to refute some things in this last post. Not to debate Steven H (there is no point to that and he appears to have a new round of sparring partners) but just to add my two cents since he referenced a few things from my life’s work….

1. Retirement plans – The wealthy and the poor have an equal playing field when it comes to saving in retirement plans. A while back, the maximum allowable contribution was changed to a DOLLAR limit rather than a percentage of pay. Plus it is capped at only $18k/year. Sure, if you make more it is easier to save – but this is no different for someone making $2m/year vs. $80k/year. The reality is though that an overwhelming amount of people (including those that can afford it) do NOT contribute to their company’s retirement plan. I have held countless 401k enrollment meetings in my career and you would be shocked at the reluctance people have to save money – even in a tax-advantaged way. You know who takes the most advantage of this tax benefit? SMART people….and those with long-term planning in mind. This crosses economic lines.

Charity – Doesn’t this tax break then motivate the wealthy (who can most afford it) to give back? I’m not sure how this is a bad thing. Accusing me of giving $250k to buy equipment for a local school or hospital as being anything but generous is preposterous.

Capital Gains – Maybe you don’t realize how progressive capital gains tax rates are. If you are in the 10-15% income tax bracket, you pay ABSOLUTELY NO taxes on gains. Beyond that it rises progressively to 15%, 20% and eventually 25%.

Estate – And then finally, to include the step-up in basis as a benefit for the wealthy is absolutely crazy. This helps the middle class far more than the wealthy as beneficiaries get to keep 100% of what they inherit even if they sell the asset. What you failed to include was the outrageous and frankly unconstitutional estate tax which takes sometimes more than half of your assets when you die and gives it to the government. There has been talk of repealing the estate tax and stepped-up cost basis rules, but it is universally believed to be much better for the lower incomes the way that it is.

To say that the capital gains, charitable giving, estate and retirement tax breaks only help the wealthy is like complaining that eating vegetables and exercise only benefit the healthy. Your cause-and-effect logic is flawed.

Sorry – didn’t want to get engaged with this pointless political spin again but thought I would at least interject some facts in case others are reading.

Reply

Peter December 16, 2015 at 12:58 pm

I should also add…

Mortgage Deduction – This actually goes away when you are in the 1%. I get ZERO benefit for this now. Once you make over $254k (single) or $305k (married) you start getting phased out of this benefit. Plus you can’t deduct a mortgage larger than $1m. So this is yet another benefit CLEARLY capped for the wealthy but extremely helpful for lower wage earners to be able to afford to buy a home. Yet you complain and call it a “break for the wealthy”.

I, for one, have a $950k mortgage and deduct exactly NONE of the interest I pay. I am maxed out at only being able to save $18k pre-tax (less than 2% of my pay). I also pay over 30% capital gains on anything I sell. When I die, my kids will split my wealth 50/50 with the US Government.

My mother pays no property taxes, deducts her mortgage interest fully, pays no capital gains and can put about 33% of her salary into a pre-tax 401k.

The only advantage I have over her is that I get a bigger tax break (percentage-wise) when I give to charity. But let’s be honest….you WANT me giving money to charity. That is the ultimate wealth transfer from the rich to the poor – building schools, helping the sick, etc.

Steven H – please stop the foolishness. You listed a whole slew of “loopholes for the rich” that were either untrue or actually even more advantageous for the lower wage earners.

Steven H December 16, 2015 at 7:36 pm

Your points are pretty good Peter. I got lazy and quoted a bankrate.com article for most of the post. I did think it was interesting to see their perspective but I see yours too.

The only part of my post I really defend as a big boost to the wealthy is the Bush tax cuts (and the Reagan cuts that preceded them) that were of huge benefit to the rich while bankrupting the treasury. But we’ve been over that road.

Steven H December 16, 2015 at 8:05 pm

Having trouble posting. Will retry …

Peter, you have some pretty good points. I got lazy and quoted most of my post from a bankrupt.com article (as I attributed in the post).
I thought their perspective was interesting but so is yours, and your comments on tax changes are more up to date.

The one part of my post I will defend as a huge benefit to the rich was the Bush (and Reagan) tax cuts, all done while depleting the treasury. And yes there was Democrat spending in the budgets but also a whole bunch of Reagan and Bush defense and war spending. Those tax cuts, if they were ever needed as a temporary kick to the economy, were retained for much too long. We are still paying the bills and will for a long time. But we’ve been over that discussion …

Steven H December 12, 2015 at 6:29 am

Is anyone else noticing a problem with the comment page? Maybe we have finally overrun its comment count array. Evertime I post, it clears the page and says there are only 63 comments. I have to go back a page and forward again to see the posts. Weird.

Reply

Steven H December 13, 2015 at 8:22 pm

PhilosoFred’s reference to the Tax Foundation analyses of Rand Paul and other tax plans have an interesting nugget of information that I only recently realized fully. Recall that the Tax Foundation is a self-proclaimed non-partisan group but is generally believed to have a bit of a pro-business pro-conservative perspective. No big problem with that but the point is that is not liberal.

Its tax analysis of the different tax plans project the impact of those tax plans as they are projected to ADD to status quo. In other words they project the *additional* GDP growth of the country and *additional* income growth of various subsections due to the tax plans.

For example, both Rubio and Paul tax plans are projected to increase incomes of upper 1% by about 27% over 10 years DUE TO THE TAX PLAN and its side effects, but only raise median and middle class incomes by 14 to 15%. Interesting.

What produces income disparity? What defines high income disparity? It is the condition of highest incomes rising faster than middle or low incomes, when calculated as a percentage. Therefore, these analyses back up an assertion for which I have been repeatedly ridiculed: that tax policy can produce high income disparity and can also be used to reduce it. And here you have a pro-conservative organization stating in its own analyses that the GOP tax plans will increase income disparity, by raising high incomes around 27%, with about half that percentage for everyone else.

Doesn’t this pretty much prove that tax policy is a significant contributor to high income disparity?

Reply

James December 15, 2015 at 11:13 am

The smart people you chased away with your close-mindedness weren’t denying that tax policy is a contributor to income disparity. They were simply saying that there are so many other greater factors that aren’t “political” that have a greater impact. But you choose to ignore those because they aren’t “liberal vs conservative”. (For instance, something VERY significant like the evolving technology revolution and its impact on the working class)

Fortunately all of this stuff is still posted on here so you can go back and re-read it if you so choose. Or keep arguing with the straw man – either way…. :)

Reply

Steven H December 15, 2015 at 7:40 pm

“The smart people … weren’t denying that tax policy is a contributor to income disparity.”
— But I’m pretty sure they objected to using tax policy to correct the problem. I’d find the quotes but the posts seem to be missing.

“They were simply saying that there are so many other greater factors that aren’t “political” that have a greater impact. … like the evolving technology revolution and its impact on the working class.”
— And I don’t deny that these things have an impact. But we can’t CHANGE those things to fix the problem. Just because we understand that loss of manufacturing, and cheap labor overseas, impacts working class salaries does not mean that we should not address the problem with other tools: like labor policy, trade agreements and tax policy. Merely understanding the sources of the disparity problem neither fixes nor negates the problem of a struggling middle class and its impact on the whole economy. It’s all well and good to say people need more education or a different career, but society and government still need to be involved to make that happen, by making education more affordable. And by adjusting tax policy to accelerate the fix.

“Fortunately all of this stuff is still posted on here so you can go back and re-read it if you so choose.”
— Actually, pages 2-10 seem inaccessible to my computer or phone browsers. I can read this page and page 1. The rest seems to have vanished.

Reply

James December 16, 2015 at 6:41 am

Sure we can change those other things. Society needs to adjust to a 21-century world rather than your approach of comparing everything to the 1950s or 60s. Society and government should be involved but it isn’t all about spending more money or stealing from those who have already earned it.

Reply

Steven H December 16, 2015 at 7:54 pm

Not trying to go back to the 50’s or 60’s. Also trying very hard not to go back to the Gilded Age. I reference the past to learn from it, not return to it.

Peter N December 17, 2015 at 11:01 pm

“— But I’m pretty sure they objected to using tax policy to correct the problem. I’d find the quotes but the posts seem to be missing.”
Yes, I object. That is the gov choosing winners and losers. The free market should prevail.

The libtards still haven’t figured out how to create wealth or make people richer. Their only solution is taking money from those that can and giving it to those that can’t.

Steven H has yet to respond to this point. Steven H has yet to see the reality of the economic situation.

Reply

James December 18, 2015 at 10:58 am

The problem is that Steven H sees raising taxes on the wealthy as the PRIMARY way to narrow the income disparity. He really isn’t interested in any other solutions other than taking money from the wealthy and giving it to the middle class. If we don’t do that, then in his mind we can’t fix the problem.

This is largely fueled by the fact that he views the income of the wealthy as “undeserved”. He would say “how can you justify that the pay of the 1% has risen at a far more rapid rate than the 99%?” – and then conclude that the increase was undeserved and should be returned to the 99%. Most of the rest of us don’t agree with this which is why we bang our heads against the wall when talking with him.

James December 18, 2015 at 11:00 am

And I should add…. raising taxes on the wealthy doesn’t even accomplish what he wants. You take more from the rich, but you actually give it to the government. This doesn’t necessarily fall into the hands of the less fortunate. It may instead go to “building democracy” in another country, or possibly just go to general Federal waste.

Steven H December 18, 2015 at 4:47 pm

“He really isn’t interested in any other solutions other than taking money from the wealthy and giving it to the middle class.”
— James, I agreed with the need to do almost all of the things you suggested up the page. Don’t lie about my stance and what I am interested in. Listen to my words, not your biases.

“And I should add…. raising taxes on the wealthy doesn’t even accomplish what he wants.”
— Tax policy can control distribution of wealth as much as any other single cause. Even the Tax Foundation, a business friendly analyzer of tax plans says so. GOP tax plans proposed, which make huge cuts to taxes of the wealthy and much much smaller cuts to everyone else, will double the percentage income increase of millionaires vs almost any other subset of the population. That’s not me making that claim. That is organization full of folks and economic models a lot smarter about this subject than you or I.

You think it is fair to shift or “steal” money from the middle class and give it to the rich but unfair to return it back to the middle class where it will better strengthen the economy. That makes no sense. Why is stealing from the middle class OK?

Also we have to fund the government. You can dream about slashing and burning government programs, but that is a fantasy. So where will the money come from to fund government? From those that have, or those that don’t?

And why, why, why do you even talk about stealing money? Business regulation policy, tax policy, and all the other government policies absolutely positively impact how the profits of this country get distributed and whose pockets they end up in. Everybody with a modicum of common sense and observational skills recognize this. When policy changes, some winners win and some losers lose but it is not theft. It is policy. And policy always changes. And the losers are never going to like it. But the wealthy have been winning long enough by a huge and growing margin. Of course they don’t want the rules to change. They want to think they make all the money and deserve all the praise. They are winning, and hate to admit that maybe, just maybe, parts of the game are rigged in their favor. It’s time to shift money back where it will do good, using every policy available. And tax policy is going to have to be adjusted to help this goal.

Peter N December 19, 2015 at 7:20 pm

All you do is talk about redistributing wealth and not creating it.
What an idiot. How does tax policy make people smarter or more productive?

Steven H and other libtards have yet to answer my question.

Steven H December 19, 2015 at 9:58 pm

Peter N,

Here is one way of stating it:

The country is creating wealth. Policies control its distribution. Government controls the policies. The rich control the government. So it does not seem surprising that the rich have manipulated the government to set the policies that impact the distribution system to favor themselves.

As an extreme example, consider a slave economy. The owner of the slaves benefits from the work of the slaves but pays them little or nothing. The slave owner controls the work conditions and prevents the slaves from improving their situation. Does it make sense to blame the slaves for not making themselves more productive or worth more than some other slaves?

Our economy is not degraded to that of slavery. But when we set education as the way up and out of poverty or joblessness, and then set the costs of higher education far beyond the reach of those who most need it, we are condemning people to stay in their impoverished conditions.

And similarly, when we prevent the middle classes, who are educated and not impoverished, from participating in the growing prosperity of the country by suppressing their wages and compelling them to compete with foreign slave-like workers who work for much less, we are also condemning our own citizens to a lesser quality of life.

Here is the question I want, in all seriousness, for you to answer. What obligation do we have as a country to uphold the quality of life of our own citizens? I’m not talking about avoiding personal responsibility. I’m talking about recognizing the shortfalls in education and career planning and actually spending some societal money and effort to do something about it. I’m talking about setting fair trade policies to prevent unfair labor competition. If the country’s economy is suffering due to a poor match of skills and need in this country, do we just allow most of the country to fail, and a few to massively profit from that change, or do we actually try to fix the problem?

James December 20, 2015 at 8:12 am

You proved my point. All you really care about is redistributing wealth. Not growing the economy or fixing the actual problem. Very short-sighted and narrow minded. But of course you have heard that before.

Steven H January 10, 2016 at 7:58 pm

James, we agree on the other solutions. Tax policy is the point of disagreement, and so that is what i discuss. There is no point in continuing to discuss the points we have already agreed on. Got it?

Steven H December 13, 2015 at 8:26 pm

Clarification:
What defines high income disparity? Highest incomes having a higher than typical share of all income. What produces high income disparity from a balanced economy? It is produced when highest incomes rise faster than middle or low incomes, when calculated as a percentage.

Reply

Peter N December 17, 2015 at 11:11 pm

“What defines high income disparity?”
Why does it matter?

Reply

Steven H December 18, 2015 at 6:11 pm

Concisely:
1) Tax Foundation analysis is one of many proofs that tax policy CAN affect income disparity. It can make it worse or better. Tax policy is certain to change. Should we set it to make income disparity worse or better?
2) Government deficits are still larger than desirable for most folks. Either government should get quite a bit smaller or taxes should go up. Government spending relative to the economy has not grown in 7 years and there are more pressures to increase rather than decrease spending. Despite the desires of some for government shrinkage, that prospect is unlikely. Therefore, our choices are larger deficits or larger taxes. What should we choose?
3) If we raise taxes, we can raise on everyone equally (as a percentage of income) or weight the change more toward getting more money from the poor or middle class, or more from the rich (as percentages of income). Which is the choice that is better for overall economic growth of the country?
4) If we avoid raising taxes to focus exclusively on economic growth to increase funding of the government and to improve the health of the middle class, then we are focussing on relatively long-term solutions such as changing education systems and business motivations. Meanwhile, during this long-term experimental time period, income disparity continues to increase and deficits rise. Is this really the best choice?

Reply

Steven H December 18, 2015 at 6:33 pm

The “concisely” post above did not seem to answer Peter N’s question.
That’s because it was meant as a stand-alone post summarizing previous posts in what is hopefully a new perspective to encourage discussion. It was accidentally posted as a reply to Peter N. Sorry for confusion.

And by the way, I hope that posters have noted that I, for one, am avoiding disparaging remarks against other posters such as those that are still being cast against me. I am trying to return this forum to some productive discussion. I hope other long-time posters will assist.

I also realize that some posters are tired of tax discussions. I get it. You may think taxes are high enough and that the solution to disparity and/or deficits is to shrink government. But assume for a moment, as dec ads of history suggest, that government is not likely to shrink much if at all. Then we almost certainly need to address taxes. Doesn’t this make sense? This is where my questions above come from.

Yes, we need to do more than address taxes. Most of us agree in broad terms that we need to at least try to improve education and better train our population to be prepared for jobs of this century. But as many note, delay is just a form of denial, and saying we have to wait a decade or a generation for experimental educational changes to possibly maybe have some favorable impact on the economy, is just a form of delay in order to avoid making an unpleasant tax decision.

And IF we get all these folks trained, but still don’t engineer the economy to give better raises to the middle class, income disparity may just stay the same with a better educated, and even harder working population. For no one has offered any actual proof that poor job skills are the cause of high income disparity.

Reply

Peter N December 19, 2015 at 7:37 pm

“And IF we get all these folks trained, but still don’t engineer the economy to give better raises to the middle class, income disparity may just stay the same with a better educated, and even harder working population.”
The question is “are these trained people worth the raise relative to what I can get over seas”.
I think the answer is yes but our gov makes it too easy to sit on your ass and still get a paycheck from the gov. There is no hope for the terminally stupid and ignorant. There will always be winners and losers.

I have been to China 5 times how. A Chinese engineer gets paid about 1/6 to 1/5 of what a US engineer gets paid but the Chinese engineers aren’t that productive. Some of it is education, some of it is the way they do business and culture.

Reply

Steven H December 19, 2015 at 9:34 pm

Peter N, Don’t you think our country has an obligation to have trade policies that protect our own citizens against unfair overseas competition? I understand that we have to deal with globalization, but i also understand that using overseas labor often means subsidizing and supporting foreign companies that take advantage of substandard work conditions, unpaid overtime, poor quality control, and industries with little or no pollution controls. Of course the US companies trying to hire US citizens have trouble competing.

Reply

James December 20, 2015 at 8:09 am

I agree with all of that Steven H. And if you believe all that you should vote for Trump rather than Hillary….

Reply

James December 20, 2015 at 8:14 am

And the best way to raise revenue to the government is to improve the economy. Not redistribution of wealth. That does nothing. If you raise taxes on the wealthy and just give it to the middle class (who already barely pay any taxes), you have accomplished nothing positive.

Steven H December 21, 2015 at 4:14 pm

I am trying to respect all opinions, but I have great difficulty giving a trump presidency any credibility.
I don’t think he can actually get the gop nomination.
I don’t think he has a prayer of beating Hillary.
And I dont think he has a clue about running this country.

And I would fear for the world if he got rlected.

Just my opinion.

Steven H December 21, 2015 at 8:21 pm

But rather than focusing on where we disagree, James … I am glad we agree on the need to economically defend our own labor force. Actually doing it in an age of global trade is difficult, but we should not compel our own workers to compete head to head with 60 hr a week foreign company workers treated like slaves.

Peter N December 23, 2015 at 10:33 pm

China imposes a tax or tariff on products we sell there. So does India.
Yet we have no tariff on their products. Why? Obama could have and should have changed this when he and the democrats had complete control. They didn’t. Why?

I know this because we sell products into China. The tax or tariff makes our products very expensive. I have been to China 5 times now.

I agree with James. Trump is the just the right ass hole we need to stand up for America. We need a nationalist for a president.

Obama has been ROAD. Retired On Active Duty.

However, none of this has anything to do with redistributing wealth or making the American workers more productive. I repeat. The libtards only want to redistribute wealth, not create it.

Reply

Steven H December 29, 2015 at 8:07 pm

I don’t know who these lib-tards are you rail against. Most Americans just want the people who actually create wealth to actually get to keep some, instead of having it reappropriated to the most powerful and wealthy. That is, that we want to STOP the immoral redistribution of wealth away from the actual wealth creators that has been happening for decades. That is what I am advocating for. You seem to be advocating for more redistribution of wealth to the wealthy.

I think American workers are already incredibly productive. Look how wealthy they made their overseers.

😉

Steven H December 21, 2015 at 8:41 pm

And while I agree that improving the economy raises government revenue, we also need to be prepared to keep the deficits less than GDP growth. Otherwise debt grows faster than the economy. Its OK for Congress to have compromises like the recent budget bill that increase spending on both political sides. But doesn’t it make sense to raise taxes to match the increases? It just seems fiscally responsible to me.

Reply

James December 22, 2015 at 7:18 am

Totally agree that we need to keep deficits down. A few ideas:

– Eliminating federal waste
– Reforming SS and Medicare
– Revamping Obamacare so it doesn’t line the pockets of the insurance companies
– Reducing military spending
– Eliminating pointless agencies like the Department of Education and sending more power to the states

If we start here we should be able to accomplish quite a bit.

Reply

Steven H December 29, 2015 at 7:43 pm

I’m mostly in agreement with the PRINCIPLE of what you propose, but let me play devil’s advocate for a moment with your list.

[Eliminating federal waste]
=It’s difficult to eliminate something that is almost impossible to measure. Polls indicate that people BELIEVE that government wastes 50% of all spending. But this is not a study or statement of knowledge, but only just a cynical belief. It’s very unlikely that waste is that rampant.
=People are wasteful. That includes people in and out of government, people in all levels of private enterprise, and people in all walks of life. You can’t ever eliminate waste. It is literally not “humanly” possible. You can only find means to encourage efficiency and reduce waste.
=Defining what is waste and measuring it is difficult. We could set up a whole program to define, measure, analyze, and seek to eliminate government waste, ant yet to some, that whole program would be another example of government waste.
=Heritage Foundation has an article listing types of waste:
>Spending on projects that cost more than the benefits they create;
>Government intervention in the form of subsidies or regulations that cause individuals and businesses to reduce their productive efforts or to engage in unproductive activities. A direct example is lobbying for additional government favors (“rent seeking”) instead of seeking profit from serving consumers to the best of their ability;
>Federal spending on functions that could be better performed by the private sector, or by state and local governments;
>Mis-targeted programs whose recipients should not be entitled to government benefits;
>Spending on outdated, unnecessary, or duplicative programs; and
>Inefficiency, mismanagement, and fraud.

http://www.heritage.org/research/reports/2014/10/eliminating-waste-and-controlling-government-spending

=Unfortunately, some of these categories are very subjective and the application of the definition is subject to political or social perspective. For instance, in the article, the authors object to “corporate welfare” as wasteful. And who would object to eliminating corporate welfare? Surely we could all agree to that. But the examples in the article include “ending energy mandates”. There are many who believe that energy self-sufficiency is an important national goal and that energy mandates (fuel efficiency goals, support for renewable energy research, etc) are an important part of investing in our future. Apparently the authors see all this as waste.

=Some of the other solutions or approaches in the article are sound in principle, but as might be expected from a political think tank, the solutions tend to advocate for a particular perspective of shrinking government and ending or vastly reducing social safety net programs. Clearly these authors will have different definitions of waste than those with a different political perspective.

=The point is that government is in a continual cycle of attempting to reduce waste. Yes it is a great idea to remove duplicative programs and expensive programs with minimal benefit, BUT that is harder than it seems. And one person’s useless government funded fruitfully research is another’s “discovery of genes that cause cancer, genes that [affect] metabolism, genes that cause developmental defects, genes that play a critical role in neurodegeneration [and a] discovery tool for many, many different pathways, proteins, diseases.” [see factcheck.org Paul Knocks Flies and NIH Funding]

Reply

Steven H December 30, 2015 at 8:32 pm

“fruitfully research” should read “fruitfly research”.

Reply

Henry December 31, 2015 at 10:05 am

Don’t worry about the spell check. Doubt anyone read it haha

Steven H January 1, 2016 at 6:54 am

You did.

Steven H December 29, 2015 at 7:54 pm

[– Eliminating pointless agencies like the Department of Education and sending more power to the states]
= This goes along with the last post. Who says what is useless? If an important current national priority is to improve the education system, wouldn’t elimination of the Department of Education be counter-productive and poorly timed? And they are only about 2% of the budget, so it is hardly a big savings to eliminate them.

Reply

James December 30, 2015 at 6:48 am

What does the Department of Education do? Your reply is exactly the problem. People get all up in arms about the elimination of something without even knowing what role it plays. Elimination of the FEDERAL Dept of Education doesn’t mean we don’t care about education. And reduction of military spending doesn’t mean that we are now in danger.

Reply

Steven H December 30, 2015 at 8:29 pm

James, I am not an expert to defend the DoED. But I could say your reply is exactly the problem as well. You want to eliminate agencies without knowing anything about their function. You just assume it must be useless because it is the federal government.

You can look up info on the DoED as easily as I can, but as i understand it, one of its most important functions is to collect data on the status and quality of education throughout the country. We cannot improve what we have not measured and evaluated. Another important function is the monitoring of civil rights aspects of education.

But basically, it seems obvious to me that an improvement in the nation’s education system requires a national agency to oversee it. Anything less would be chaos.

James January 2, 2016 at 7:24 am

Point being there is a lot of waste in the government…..

Steven H January 3, 2016 at 9:18 am

Yes James, there is waste, and there are already attempts to reduce it. But not everybody agrees what is waste and what is valid investment. That is the point.

Meanwhile we have a deficit that cannot be shrunk simply by reducing government waste, a tax code that has been improved slightly and has reduced deficits but which still vastly favors the rich, a middle class under threat by stagnating wages, exported jobs, and outrageous education costs, and upper class which is profiting enormously by those same conditions that hurt the middle class.

We agree that we must improve the education system. That will take state funds, federal funds, and federal oversight from a functioning DoEd. And it will take more taxes, not fewer. And the oppressed middle class should not have to contribute very much to that tax increase.

We agree, I think, that the middle class is under threat, and that higher minimum wages tied to inflation will help. We agree, I think, that individuals must also be motivated and guided to train for productive technical and non-technical careers. This will require government oversight, ideally with cooperation of private industry.

I hope we are in agreement that we need better restrictions and constraints on national and multi-national industry, so that they do not eliminate and overrun the competition from small and medium size businesses. I believe these restrictions should include tax rules and high marginal tax rates on 10 million plus incomes. You likely have different solutions for the same goal.

James January 4, 2016 at 6:23 am

“a tax code that has been improved slightly and has reduced deficits but which still vastly favors the rich”

I don’t agree. People making $1m still pay more than 40% in Federal income taxes while half of the country pays nothing. That does not “favor the rich”.

Steven H January 10, 2016 at 10:43 am

James: People making $1m still pay more than 40% in Federal income taxes while half of the country pays nothing. That does not “favor the rich”.

That is one statistic in isolation. And a deceptive one, at that, as has been addressed many times. Despite the lack of federal income tax burden, the lower quintile of earners still pays 20% of their income in some kind of tax. Look at the big picture. The millionaires have benefitted from policies that have increased their income tremendously at the expense of all other income groups, and yet their effective federal tax rate (income and SS) was until recently LOWER on that income than for people making $100K. And even now, with increased taxes on millionaires, it fails to counter the increased share of the economy they enjoy from decades of tax advantage over everybody else.

We have policies and tax rates that STILL favor the rich. This is pretty much indisputable.

James January 10, 2016 at 12:28 pm

Anything but indisputable. Millionaires pay over 40% in taxes, plus payroll taxes, property taxes, sales taxes and estate tax. Half pay no income taxes, no estate taxes, reduced property taxes but do have payroll taxes and state taxes.

Steven H January 10, 2016 at 6:54 pm

James, let’s at least get the numbers straight. When you say that “People making $1m still pay more than 40% in Federal income taxes”, do you men that they are paying an effective federal income tax rate of 40% of their income? That seems to be incorrect by any tables I have found. Effective federal income tax rates on upper 1% were about 22.8% in 2012 and the rate DECLINES as you look at the richest of rich, to only 17.6% for the upper 0.001%. (It’s hard to find good tables more recent than 2012, but I’m pretty sure effective tax rates have not gone from 22.8% to 40%.)

Perhaps you mean that millionaires pay 40% OF all federal income taxes. That is a completely different statement. In 2012 the upper 1% (with AGI above $434K, so its more of the population than just the millionaires) paid about 38% of all federal income tax.

http://taxfoundation.org/article/summary-latest-federal-income-tax-data-0

Steven H January 10, 2016 at 7:19 pm

Also there is an article i referenced in a previous post (probably one page back, haven’t looked for it yet) which indicates that if you summarize all taxes (federal income, FICA, state, property, sales, etc), all income groups pay about the same share of taxes as they receive in income. It goes up slightly for richest folks but really our tax system, in toto, is practically flat.

Realizing that fact, it is completely absurd for rich folks to complain about how high their percent share of the tax burden is. It is high because their share of the income pie is high, and for no other reason.

In fact effective federal income tax rates on the upper 1% have gone DOWN since 1980, even as income shares went UP.

Stats on upper 1%, 1980 vs 2012 (from taxfoundation.org)
Income share: 8.5% –> 21.9% [2.6x ]
Federal Income Taxes: 19.1% –>38.1% [2.0x]
Effective federal inc tax rate: 34.5% -> 22.8% [0.66, or 2/3]

So, when income shares of the upper 1% have gone up 2.6x but the effective tax rate was cut by a third, how could you possibly argue that tax and labor policy has NOT clearly favored the rich?

Steven H January 10, 2016 at 7:20 pm
Steven H January 10, 2016 at 8:29 pm

Found my other data on how our current tax system is practically a flat tax.

Lowest 20% receive 3.3% of all income and pay 2.1% of all taxes.
Middle 20% receive 11.2% and pay 9.9%.
Within the upper 10%:
The upper 1% receive 21.6% and pay 23.7%.
The next 4% receive 14.2% and pay 15.2%.
The next 5% receive 10.1% and pay 10.7%.

http://www.taxjusticeblog.org/archive/2015/03/the_facts_missing_from_the_deb.php#.VX-aY2A326M

Peter N December 23, 2015 at 10:41 pm

There is a drug that was prescribed for me. It cost almost $400 per quarter. I could buy the same drug from Canada but it is illegal. I have found another solution but my point is that Obama also favors the drug manufacturers. American pay much more for their drugs than other countries even if they are made here.

I think military spending will always be necessary. It could be more efficient but the defense of our country is part of the US Constitution. I would ruthlessly cut those agencies that are not mentioned in the Constitution.

I would not be afraid to ruthless defend the US Constitution against ALL enemies foreign and DOMESTIC. Read the other the president, senators, representitives and military people take. I would hold them all to their oaths.

Reply

Steven H December 29, 2015 at 6:16 am

I agree our drug prices are too high. The reasons for the low prices in Canada and elsewhere are (a) price controls in those other countries, (b) simpler health systems with fewer organizations negotiating the prices.

If we were to have a single-payer system here, we could have lower negotiated drug prices with the big pharma companies. Our current system encourages lobbying by the powerful pharma companies and insurance companies who profit off of the high cost of health care, although somewhat less than the pre-ACA system which was even worse.

Interestingly, the changes due to ACA will put some pressure on drug prices via competition and consumer awareness. My wife uses an inhaler that was redesigned to be more complicated and efficient. Our company just went to a health insurance plan where we pay for the drugs and then get reimbursed. This was partly to get a lower cost plan under ACA rules. Now i see that the cost for that inhaler for one month is $300. Unacceptable. I can go online and get coupons to cover half or more of the cost. I can get the drug from cheaper pharmacies. All because I see the price and how I can save myself and my company plan some money.

All that said, we should have some sort of drug price controls here. The difficulties are battling the lobbying forces of insurers and pharma. Yet another reason to legislate a revocation of the Citizens United ruling.

Reply

Peter N January 5, 2016 at 9:13 pm

“. The reasons for the low prices in Canada and elsewhere are (a) price controls in those other countries, ”
Explain! If the drug companies charge $390 for a 3 month supply here then how can I get the same drug and quantity in Canada for $109. If the supply comes from the US then how can Canada subsidize the $280 difference?
Why is it illegal to buy from Canada? I have lived there. Canada is not a 3rd world country.

Your Obama Care is a fraud is so many ways. It has nothing to do with making medical care cheaper. It is just another wealth distribution scheme.

Reply

Steven H January 10, 2016 at 7:52 am

Come on, Peter N. This is basic. The health care system is like a business negotiating with a supplier. Canada negotiates a lower price, like Wal-Mart negotiating with a supplier vs Joe’s corner store. Canada doesn’t “subsidize” the cost. It pays less, like Wal-Mart. The US doesn’t negotiate as well, because it doesn’t have a single point of contact like Canada. Every insurance company negotiates separately, and they don’t have a real vested interest as they can just pass costs to the consumer.

ObamaCare has weaknesses. The thing is, the previous system had even more weaknesses. People getting dumped from policies over technicalities when their care got too expensive. People losing all coverage when they lost or changed jobs, and then were unable to get new coverage due to pre-existing conditions. ObamaCare is the imperfect middle-ground between the really awful pre-ACA system and the much preferred Universal Healthcare.

Reply

Steven H January 10, 2016 at 8:02 am

And of course, the uninsured have no negotiating position at all, and will go into bankruptcy to buy the over-priced medication.

2013 CNBC article
Medical Bills Are the Biggest Cause of US Bankruptcies: Study
http://www.cnbc.com/id/100840148

also 2015 article from USA Today, search for keywords:
usatoday consumers-still-struggling-with-medical-debt

Reply

Steven H January 10, 2016 at 10:53 am

PeterN: Why is it illegal to buy [medications] from Canada? I have lived there. Canada is not a 3rd world country.

Big Pharmaceuticals want to established closed systems. If Canada negotiates a lower price for the Canadian market, they don’t want that price to be available to everyone. So they negotiate rules to their advantage. If we had a system like the extraordinarily popular healthcare system in Canada, maybe we could negotiate the same prices.

Reply

Peter N January 13, 2016 at 11:37 pm

So why didn’t Obummercare truly make drugs more affordable. All obummercare did is get other people to pay for the uninsured. It didn’t make anything more affordable for the rest of us.

Reply

Steven H January 10, 2016 at 7:43 am

Nice post up the page that some may have missed over the holidays.

http://moneyning.com/career/who-actually-earns-400000-per-year/comment-page-12/#comment-1398380

Irrational Exhuberance December 28, 2015 at 11:27 am
Trickle down economics has been proven without any doubt in academia, looking at historical data as well as projecting it, to fail. The rich qet wealthier a lot faster than the not wealthy in scenarios where taxes are lifted on the wealthy. … [more in the most. click on the link.]

Reply

Steven H January 10, 2016 at 10:09 am

I’ve been rereading this page. Here are a few select quotes that help to summarize the arguments against raising taxes or even addressing high income disparity.

Nat: Top-down / central planning type questions that you’re asking like “Should we for instance, over the next 30 years seek to double or triple the real incomes of the upper 1%…” are going in the wrong direction and sugfesting that one size fits all decisions should be made to limit the pay of upper management. The market is best suited to make these decisions.

Dynx: That’s why salaries for high level people go up. We make the money. … His secretary may not have gotten a raise in who knows how long. Who cares?”

James: Therefore I don’t want the liberals trying to prevent higher salaries for CEOs or whatever wealthy successful people you abhor – NOR do I want the GOP proposing that we raise CEO salaries.

Peter N: All democrats do is talk about taking wealth from others. Give me a plan about generating wealth. … I can see the libtards still don’t have a plan to make people worth more so they deserve higher pay relative to machines or foreign labor. They are not interested in creating wealth only re-distributing it.

Peter N: ” We need to make the market work differently and then people will get paid their worth.” [quote from Steven H]
The free market does that.

Peter N: “— But I’m pretty sure they [conservative posters] objected to using tax policy to correct the problem [of high income disparity].” [quote from Steven H]
Yes, I object. That is the gov choosing winners and losers. The free market should prevail.

James: raising taxes on the wealthy doesn’t even accomplish [reduction of high income disparity]. You take more from the rich, but you actually give it to the government.

===
Or to summarize further: The free market best determines all incomes. There are no significant changes that government can or should make to address high income disparity, and if any such government incentive IS found, it is equivalent to stealing from the rich, or income redistribution, and is an unjust and undesirable distortion of the market. If people’s salaries are not growing at the national rate, it is their own fault for not making themselves more valuable with different skills, or more effort. It has nothing to do with government policy or market manipulation by wealthy and powerful people.

If my summary above is indeed the fairly stated perspective of the above posters, I find it naive, deceptive, and self-serving. As well as inconsistent.

Points and counterpoints:
1) Government policy is supposedly either incapable of correcting high income disparity or, if capable, should be off-limits for use. Specifically, tax policy should not be used. – This disregards the studies (Tax Foundation, and others) showing that every analyzed tax policy proposal of Republicans will increase high income disparity SOLELY from the impacts of that tax policy, and the primary characteristic of each policy is slashing taxes on the rich. It is extraordinarily inconsistent to claim that government policy changes will not fix a problem while supporting policies (tax cuts for wealthy) which every credible study confirms will make the problem worse.
2) Income redistribution is morally abhorrent, but only when moving money from rich to poor, and not the reverse. — The contradiction in this statement is obvious. It is extraordinarily inconsistent to abhor income redistribution that is unfavorable to you, but to advocate for it when it favorable to you.
3) Free markets are perfect, or near perfect, and should not be modified or constrained by government policy. — Free markets are DEFINED by government policy. The only truly free market, unbounded by government policy, is that of warring slavelords. Since government policy DEFINES and CONTROLS the free market, it can be used to reshape it, control it, improve it, … or make it worse. Claims that there exists a free market independent of government policy seem absurdly idealistic.

Here is the thing that we all agree on. In this country, capitalism harnesses the power of free will, ingenuity, hard work, and the reward for successful application of the previous, to improve our society, our economy, our world, and the lives of our citizens.

Here is the point which we should agree on, but some may dispute. Humans in their societies lean toward empire building, and the most wealthy and powerful will almost always seek to increase their own wealth and power at the expense of others, simultaneously degrading the efforts and abilities of those the conquer and rule and oversee.

Here is the assertion which divides us on discussing income disparity. When the wealthy and powerful increase their wealth and power much faster than the general population [as human nature naturally inclines], the general population has both the right and responsibility to reverse the process through policy changes. This will improve the quality of life of most citizens and of the society at large. And this is the genius of Democracy, that it allows the general population to make this decision.

Reply

James January 10, 2016 at 12:29 pm

LOL – still beating the same narrow-minded drum.

Reply

Steven H January 10, 2016 at 6:05 pm

Refining the argument.
Realize also that those who refuse to accept any possibility of raised taxes as a need or solution are at least as stubborn and narrow-minded as those who insist on it.

Do you at least agree agree with the first two of the last three paragraphs? And do you agree that the last paragraph concisely describes the point of our disagreement?

Reply

Steven H January 10, 2016 at 6:13 pm

And do you agree with my summary of your arguments in the “Or to summarize further” paragraph?

I am truly interested in stating your argument correctly.

Reply

James January 11, 2016 at 8:16 am

NO I don’t agree with your summary of my arguments. They are typical of your approach. You turn a well thought out argument into a slanted, political, juvenile version of others’ perspectives. You keep running people off because of this. It is asinine….

Here is the part I agree with: The free market best determines all incomes.

I originally was going to counter/reword all your other remarks but seem to remember others doing this and it was relatively pointless.

Reply

Steven H January 13, 2016 at 8:04 pm

Why do you think it is pointless to express your argument clearly and concisely if I have failed to do so?

I would say that my post above is the farthest thing from being juvenile. I have an opinion and you have a different opinion. I have stated mine. My summary of “your” argument is an amalgamation of actual statements from either you, or Peter, or Peter N, or other posters you have agreed with. Not all of you have precisely the same opinions, I understand that. But I still think the paragraph expresses what has been said here by these various posters without twisting or distorting. If it does not express your opinion, then please enlighten me with a modified version.

James January 14, 2016 at 11:03 am

Because I (and many, many others) have expressed our arguments before. If you listened the first time we wouldn’t need to keep retreading the same material…. By your ‘summary’ you clearly aren’t listening to Peter, Peter N, me or any others if you think that is what they are saying.

James January 14, 2016 at 11:06 am

….and here is where you go and pull selected lines out of previous posts and say “tell me what I am missing”. I’ve been down this road before – not going there again. Not sure why after 2-3 years on this comment board you would all of a sudden understand the point of view of someone outside your narrative.

James January 11, 2016 at 8:24 am

“all income groups pay about the same share of taxes as they receive in income. It goes up slightly for richest folks but really our tax system, in toto, is practically flat.”

This is LUDICROUS! I have been in just about every tax bracket there is in my lifetime – from unemployed to minimum wage to a 7 figure income. I will tell you firsthand that our tax system is anything but flat. You are letting the top 1% percentages get skewed by people who are retired and derive the majority of their income from dividends and interest. And as usual you aren’t seeing the true story because it disagrees with your narrative.

PLEASE – I would love as everyone does their taxes to anonymously post their income and their effective tax rate. Maybe if some of the more intelligent posters came back (JTM, Ken, Peter, Man of Reason, Stevendad, JB, etc.) they could post this. I know nobody wants to engage with Steven H anymore, but I for one would love to see the numbers anecdotally.

Reply

Steven H January 13, 2016 at 5:50 am

James, look at the article. I did not say federal income tax system was flat. I said this article above calculates that the sum of all taxation is almost flat. It is so typical of you to take my arguments and distort them into a slanted political juvenile version. Adsress my actual arguments and we can have an adult discussion.

Reply

James January 14, 2016 at 2:22 pm

uh…. I didn’t say anything specifying the “federal income tax system”. I just quoted you. I was talking about the sum of all taxation too. I addressed your argument directly.

Reply

Steven H February 8, 2016 at 8:27 pm

You didn’t address the argument. You refuted it with your opinion, without referencing the article and without offering any facts.

Reply

Steven H January 13, 2016 at 5:53 am

Also, james, you have not addressed your statistics error claiming that millionaires pay 40% of their income in federal income tax. Do ypu habe a source for that stat?

Reply

James January 13, 2016 at 6:42 am

I just know what I pay and what the other partners at my law firm pay.

Reply

Peter N January 13, 2016 at 11:51 pm

The top federal income tax rate is 39.6%.
SS tax 6.2%
Medicare 1.4%
That is 47.2%
not counting all the local taxes and fees.
Then there are taxes on investment income.

Reply

Steven H January 15, 2016 at 5:45 pm

True. But someone in the 39.6% bracket is not paying 6.2% on all of their income for SS. So you can’t add all of those percentages without stating some caveats.

Reply

James January 16, 2016 at 3:36 pm

Boy that was missing the point…..lol

Reply

Steven H January 13, 2016 at 11:35 am

The tax policy center and tax foundation each have good tables on effective tax rates of upper 1%. The most recent effective federal income tax rate for this group is under 23%. Tables go through 2011 or 2012. Look up effective tax rate tables. Tax policy center also sums impact of other federal taxes, including corporate. This total is 29% in 2011.

Perhaps you can explain how you and your fellow lawyers pay at least 33% more than the average of your income group. Or provide a source rather than a personal guesstimate.

Reply

James January 13, 2016 at 12:23 pm

I have told you before – your “across the board” stats include retirees and people who get most of their income passively – through investments, etc.

If the majority of your income comes from wages, you are getting crushed – particularly with the new tax increases Obama has added.

Reply

James January 13, 2016 at 12:24 pm

And if you are looking at the 1%, you are including people who make $350k. Once you get up over $500k, your tax rates go up significantly.

Reply

Peter January 13, 2016 at 12:40 pm

I just did my taxes and my effective Federal tax rate is 33.4%. It was 28% in 2014 and 26% in 2013. This does not include payroll tax, property tax, state tax, local taxes, etc.

Reply

Steven H January 13, 2016 at 8:05 pm

Thank you for the data.

Steven H January 13, 2016 at 7:43 pm

Yes, you are correct there will be quite a broad spectrum of effective tax rates for high earners depending upon what percentage of income is coming from investments. I was using a published average.

For the record, I think most tables use ratio of tax paid to AGI as the effective rate. The taxable income is often lower than the AGI, so if you take the ratio of taxes to taxable income, you get a higher rate. I’m not sure which definition you are using.

My effective rate (tax/AGI) in 2014 was 13.3%.
My tax to taxable income rate was 16.8%.
So they can be quite different.

The 2015 top marginal rate is 39.6%, and 39.0% would be the approximate effective rate IF you made, say $7 million, and your AGI was actually your taxable income (no exemptions or itemizations) and all of your income is from wages. But this, I think you will agree, would be the rare exception more than the rule.

I tried a few calculations using 2015 rates, and ignoring Alt Minimum Tax for simplicity. Someone single in 2015 and earning $1M in wages with no exemptions (AGI=taxable income) would have an effective tax rate of 35.2%. Any exemptions or capital gains income or carried interest income would effectively lower that rate. It’s generally true that earners over $1M will be more likely to have significant investment income. Perhaps this is less true among lawyers you work with?

Anyway, I think it may be more correct as a general statement to say that most million plus earners pay 20% to 35% of their income in federal income taxes, depending on proportion of wage and investment income, with the average being somewhere around 25% (according to published tables). I think it is too much of an exaggeration to say that, in general, million plus earners pay 40% in taxes, since there is likely a very small percentage with effective rates over 36%, it’s almost impossible to get to the asymptote of 39.6%, and the average is around 25%.

Sound reasonable?

Reply

James January 13, 2016 at 8:38 pm

No it doesn’t. I was using effective tax rate by its actual definition – total taxes paid divided by total income. If I used AGI the number would be a higher percentage.

Regardless, I pay close to 40% when you count payroll tax, state tax, federal tax and property tax. Actually you don’t even need to include property tax. I’m at 40 percent just from federal and state.

The numbers are skewed by the Bill Gates of the world who have gazillions of dollars in dividend income which is taxed at a lower rate. Not the rest of us making $350-$1m mostly from income. We are getting raped by the tax code…..to insinuate it we essentially have a flat tax is honestly the dumbest thing you have said on here.

Reply

James January 13, 2016 at 8:41 pm

Why don’t you listen? I’m telling you that EVERY attorney I know and have talked to has said they are paying in the high 30s in effective federal taxes. Yet you try to “hope” that this isn’t true or is an anomaly. Learn something!!!! I guarantee that if someone other than Peter who makes good money comes on here with their effective tax rate it won’t be 20-25%.

This is no different than republicans touting welfare queens…..sure they are out there but most people aren’t abusing the system – they are surviving on it. And most people who make $350k-$1m are getting destroyed by the tax laws.

Steven H January 15, 2016 at 5:21 pm

James, I don’t understand why you get so snippy. I haven’t disputed anything you are saying here, and if anyone is not listening it is you.

You made the blanket statement that millionaires (or million plus earners) pay 40% of their income in taxes. When the highest marginal rate on income is 39.6% and there are various deductions and additional impacts like lower rates on capital gains, your blanket statement is just untrue or at least woefully incomplete.

If you are telling me that most lawyers you know are in the 35%-40% effective rate range, that is interesting and I have no reason to doubt you, but I have also calculated that the ratio of federal income tax/AGI at income of $1M with no deductions and no income set aside into investments or coming from investments yields an effective rate of just 35.2%. Perhaps you know some extraordinarily high income lawyers or there is some tax subtleties i am missing, but I am just using math and published tax rates here.

My calculator does not have a “hope” button, so I am not using that.

Peter has said his effective rate is 33.4%. That fits in with expectations for a high earner in the $700-$1M range. But it is not 40%, and that is my point. 40% is an exaggeration when you use it as a generality of what rich people pay in federal income tax.

As for the 20-25% rate (22.83% in 2012, probably closer to 25% now), that is a published average for the upper 1%. It’s not my number. I didn’t make it up. And I already agreed it is skewed by those with investment income. In fact, the highest earners have even lower effective rates, and since they are part of the 1% they are definitely going to skew the averages.

Effective federal tax rates in 2012
Upper 1% : 22.83%
Upper 0.1% : 21.67%
Upper 0.01% : 19.53%
Upper 0.001% : 17.60 %

So once again, I have agreed with you on the substance of your argument (effective rates depend on ratio of investment income, rates can soar up to around 35% for millionaires), I have presented you with facts backed up with data, but I disagree with your one statement that millionaires generally pay 40% of their income in taxes. And rather than acknowledge the truth of what I have presented to you, you get all snippy and irritated and insult my character. I really don’t understand this behavior.

Steven H January 15, 2016 at 5:29 pm

“to insinuate it we essentially have a flat tax is honestly the dumbest thing you have said on here”

It is not a dumb statement. It is a statement based on average data across income groups, based on published information within an article I have provided to you, and it is true within the assumptions of those calculations. Rather than just calling something dumb, one could make the more insightful statement that taxes within the upper 1% are far from flat because of the disparities between wage earnings and capital earnings. I would agree with that.

Why do you always feel you must insult people you disagree with? Do you do that in real life as well as online?

James January 15, 2016 at 8:34 pm

Since you didn’t read it the first time….

Regardless, I pay close to 40% when you count payroll tax, state tax, federal tax and property tax. Actually you don’t even need to include property tax. I’m at 40 percent just from federal and state

Steven H January 15, 2016 at 9:26 pm

Actually, James, I did read that part, and yes the effective rate goes up when you add multiple taxes. I am not disputing that you pay an effective rate of 40% when you add federal and state income tax, or federal income and tax and some other tax. I understand your point that wage earners in the 500K to 1 mill range get hit with much higher effective percentage rates than averages for the 1% indicate.

The technical point that I was making was that your original statement was not really correct.
[People making $1m still pay more than 40% in Federal income taxes while half of the country pays nothing. That does not “favor the rich”.]
People making $1M do not pay more than 40% of their income in Federal Income Taxes. That is not really possible under most circumstances with a top marginal rate of 39.6%, unless you add some unusual tax circumstance or you start fudging the definitions. They only pay 40% or more if you add other taxes on top. Please be willing to concede this technical point so we can move on.

And ON AVERAGE, including investors, the whole of the upper 1% pays closer to 25% of their income in federal income taxes, with the wage earner paying a considerably higher rate, but still less, not more, than 40%. Again, this is tabulated data, not my opinion, so let’s move on.

I think the larger argument you are making is that people in your circumstance, high earners of wage income, are hit particularly hard with taxes, whether you consider federal income or total tax, and in fact pay higher total tax effective rates than just about anybody else. AGREEMENT ALERT: This is actually a pretty good discussion point.

What that means to me is that the investors are getting even a better deal than the tabulated data suggests. If wealthy wage earners are paying around 35% in effective Federal Income Tax rate and the average for the 1% is 23 to 25% effective rate, than investors are paying way less, maybe closer to the 17.6% or so that the upper 0.001% were paying in 2012.

So perhaps one solution is to raise federal tax rates on capital gains, not on wages, or perhaps to treat capital income beyond a certain amount as equivalent to wage income, and taxes at wage income rates. That would help to even the effective tax rate slopes between wage and investment earnings of high earners, and limit or eliminate the need to raise wage tax rates. How would you feel about that?

And as to whether tax policies favor the rich, perhaps that argument could be refined into a few more more precise statements, including the following two:
1) Federal tax policies from 1980-2012 favored the rich more than policies from 1950-1980 did.
2) Federal tax policies today including recent tax increases are still more favorable to the rich than they were from 1950-1980 (although less so than from 1980-2012).

James January 16, 2016 at 7:53 am

One other point – all the stats you quote have been several years ago (2011, 2012) – you aren’t taking into account the big tax increase that Obama has levied on the upper income earners. Just the ACA alone adds about 4% to everyone’s income tax at that level.

As I file my taxes I will try to remember how the tax laws “favor the rich”. Sorry, but not going to buy it.

Cole January 16, 2016 at 12:10 pm

The long term capital gains and dividends tax rates were increased by over 8% in 2013 to over 23%. These are the highest rates we have seen in 20 years. This is a huge jump – enough for you Steven H? One of the concerning issues is that for most non 1% individuals, it’s never going to be enough in their eyes. Now that taxes are the highest they have been for a couple of decades for the 1%, can we focus on either less spending or smarter spending (or preferably both)?

Peter January 16, 2016 at 3:35 pm

Amen, Cole….. And how about that fact that over 100 million people pay a ZERO capital gains tax rate. Yet, I am taxed at 23.8%.

Me:
23.8% on my capital gains
33.4% effective Federal tax rate
5.75% State tax (and I live in one of the more reasonable states)
12% payroll taxes on the first $110k I earn
1.5% property taxes
Plus – the inability to take deductions others can and 40% plus of my assets going to the government when I die.

My mother making $50k –
0% capital gains rate
9.5% income tax rate
5% state tax rate
12% payroll taxes on earnings
0% property tax
Plus – full deductibility for mortgage interest and 0% estate tax.

Still not enough. Government needs more money to run efficiently. Don’t we all….

Peter N January 13, 2016 at 11:56 pm

I got into the 39.6% tax bracket big time last year.
There is a difference between percent taxes paid and marginal tax bracket.

So when are the lower 50% going to start paying something? Bummer’s approval rating is just about at the level of those that don’t pay federal taxes. That is buying votes.

Reply

Steven H January 15, 2016 at 5:37 pm

Once again, federal income taxes are not the only taxes. State taxes, property taxes, sales taxes, FICA, Medicare tax, are all taxes. And the lower 50% pay them. That IS “something”. Within their incomes, it is a actually a much higher burden on their incomes and lifestyle than taxes on the 1%.

Cole January 15, 2016 at 6:18 pm

Steven H – See my comment at the bottom regarding taxes. When individuals are working and wages are the main source of income, the effective tax rates aren’t close to being flat for the 1%. They are typically over 30%, not including various other taxes (state taxes, Medicare, Social Security, etc.) which often push the rates close to 50%. You can add in whatever other taxes you want (sales taxes, etc.) to non 1% individuals and it’s still not going to be close to 50%. Where it gets interesting is when long term cap gains and dividends are a significant source of income. Warren Buffet claims that his secretary pays more in taxes than he does, which is absolutely absurd. Any W2 income he has received over the years has likely been taxed at over 40% and then invested. Once invested, he pays federal and state taxes every time he receives interest, dividends, and realizes capital gains. That tax rate (including state taxes) is around 30%, depending on the state. Then he reinvests again and then again gets taxed once he receives interest, dividends, and realizes capital gains. This perpetually happens for his entire life. Then, when he passes away, assets over $11mil (I’m rounding) and not going to charity are hit with a 40% federal estate tax (and some states have estate taxes), which depending on how charitable he ends up being could be billions in taxes. If you do the math on all of that, I think it’s safe to say his secretary making $100k-$150k per year isn’t going to come close to paying what he pays. Not close.

Cole January 14, 2016 at 7:02 pm

I’ve been reading these comments for months and decided to finally join the fun. Hopefully I can add some clarity to the numbers as I am a private wealth manager for ultra high net worth clients. I deal with the tax return preparation and planning, as well as the investment management for my clients. I’m definitely going to lean toward the James and Peter camp, while recognizing that the answer is usually somewhere closer to the middle, but in my opinion still further away from Steven H. In short, I believe the 1% pay their fair share. The highest marginal tax rate is 39.6% federal, not including Medicare of 2.35%, and Social Security of 6.2% of the first $120k (I’m rounding) of W2 income – self employed individuals get hit harder with self employment tax. My effective tax rate for 2015 was approximately 33% and many of my clients are over 35%. If you back out the Medicare and SS, the my effective rate is around 30% and many of my clients are over 32%. These numbers are lower than James and Peter might expect, but it is because I live in a high tax state and my clients receive a deduction (partial deduction due to the itemized deduction phaseout) for state taxes paid, which lowers the overall federal rate by a couple percentage points. Also, this doesn’t include property taxes or state taxes. When you add federal, state, Medicare, SS, property, etc, the tax rate ends up being in the 45%-50% range for many 1% people. This isn’t their fair share? Really? Full transparency on this – I’m talking about individuals making more than $1mil. At the lower end of the 1%, the effective tax rates are obviously a little lower. Also, to James’s point, the statistics Steven H is quoting certainly include many individuals with certain investment income which is taxed at a lower rate, but remember, these investments are net of tax to begin with, which means that they have already been taxed at 45%-50% on the money before investing and now they are being taxed again on the growth (I’ll comment on this in another rant).

Reply

James January 15, 2016 at 7:13 am

That’s a great point about the investments being made with after-tax money (already taxed at 45-50%) and then taxed again when they earn or grow. And then the government takes up to 50% of it again when you die. Hard to make an argument that the 1% aren’t paying their fair share or that it is equal to the taxation (percentage wise) of someone making $50k.

Reply

Steven H January 15, 2016 at 9:41 pm

Nice data, Cole, and thanks, but I don’t have time to respond in full tonight. I have some thoughts about the “fair share” discussion, with the short answer being that I care less about arbitrary arguments of fairness or whether something is double taxed (almost everything is), than I do about whether tax and labor and business and export policy create an economic system that is balanced and sustainable and provides most Americans with rising wages and reasonable reward for their work. I think the thumb has been on the sales in favor of the rich for decades. But of course, if you have been reading this forum, you already know the gist of my views.

More later. And welcome to the madhouse.

Reply

Steven H January 15, 2016 at 9:43 pm

Thumb on scales. Not sales. On second thought, maybe thumb on the sales makes sense too. 😉

Reply

Steven H January 17, 2016 at 9:16 pm

Just a reminder for those complaining about today’s “high” capital gains rates.

The rate was 35 percent under Presidents Richard M. Nixon and Jimmy Carter, then dropped as low as 20 percent under Reagan before rebounding to 28 percent. It rose again, to 31 percent, under President George H.W. Bush as part of the controversial 1990 budget deal. Under Bill Clinton, the rate was cut to 28 and then 20 percent, before George W. Bush sliced it to 15 percent. It is now 15% under an income threshold (around $500K) or 20% above the threshold plus a 3.8% medicare surtax on investment for incomes over $250K (roughly – actually the rules are complicated).

So that maximum of 23.8% may seem outrageous but it is still on the low end of historical rates.

Here is a more complete table

Years …………….Indiv. Rate …………..Corp. Rate
1955–1967…………. 25.0% ……………. 25.0%
1968 ………………… 26.9% ……………. 25.0%
1969 ………………… 27.5% ………….…. 25.0%
1970 ………………… 30.2% ……………. 25.0%
1971 …………………. 32.5% ……………. 25.0%
1972–1974 ………… 35.0% …………… 25.0%
1975–1977 …………. 35.0% …………… 30.0%
1978 …………………. 33.8% …………… 30.0%
1979 …………………. 35.0% …………… 30.0%
1980–1981 (Jun 9) 28.0% ………….. 28.0%
1981–1986 ………… 20.0% ………….. 28.0%
1987–1992 ………….28.0% ………….. 34.0%
1993–1997 (May 6) 28.0% ………….. 35.0%
1997–2003 (May 5) 20.0% …………. 35.0%
2003– 2012 ………… 15.0% ………….. 35.0%
2013–2015 ………….. 20.0% …………. 35.0%

Reply

James January 17, 2016 at 9:19 pm

So? Again. Not. The. Point.

Taxes are not flat. The rich pay far far far far more than the poor.

Reply

Peter January 18, 2016 at 12:42 pm

I am astounded that you are still trying to convince people that 2015 taxes are anything close to flat. Have you noticed that for about 6 months you have had nothing but detractors? Did you ever think maybe your point of view might be wrong or at the very least incomplete or misguided?

Reply

Steven H January 18, 2016 at 9:23 pm

James and Peter,

I posted ONE article on the previous page, and reposted it on this page, addressing 2014 statistics that indicate that the totality of the tax system, including ALL federal and state income taxes is a lot flatter than most people realize.

This is not something I invented or that “I am still trying to convince people of” as if it is a long running theme. It’s an article. With some data. And some conclusions. You may read and discuss. Or you can dismiss it out of hand, ignoring information which does not fit your agenda, and attack my character.

You two can be better than this. How is my posting an article of data representative of being wrong or misguided? Did you even LOOK at it?

Reply

Steven H January 18, 2016 at 9:26 pm

In case you can’t find it, here is some of the relevant text:

First, it is critical for lawmakers not to just look at the federal tax system in isolation, as the JCT report does, but at the tax system as a whole. While the federal tax system is generally progressive, state and local taxes are notoriously regressive. In fact, a recent report by the Institute on Taxation and Economic Policy found that the poorest 20 percent of taxpayers pay about twice the state and local tax rate of the top 1 percent.

A study of the overall tax system in 2014 (including federal, state and local taxes) by Citizens for Tax Justice (CTJ) found that our tax system is just barely progressive overall. For example, the richest taxpayers are paying tax rates very close to the rates paid by middle class Americans, with the middle 20 percent of taxpayers paying a 25.2 percent rate and the top 1 percent paying 29 percent on average. In addition, each income group’s share of total taxes paid closely mirrors their share of total income, with the top 1 percent paying 23.7 percent of all taxes while earning 21.6 percent of all income.

Lowest 20% receive 3.3% of all income and pay 2.1% of all taxes.
Middle 20% receive 11.2% and pay 9.9%.
Within the upper 10%:
The upper 1% receive 21.6% and pay 23.7%.
The next 4% receive 14.2% and pay 15.2%.
The next 5% receive 10.1% and pay 10.7%.

The article also discusses the disparity between wage and capital income, as we have also addressed here.

http://www.taxjusticeblog.org/archive/2015/03/the_facts_missing_from_the_deb.php#.VX-aY2A326M

Reply

Cole January 18, 2016 at 9:47 am

I’m not sure that any of my comments so far should be construed as a “complaint” and I don’t remember writing that the rates were “outrageous”. I accurately indicated that long term cap gains rates are the highest they have been in almost twenty years, which your table confirms. Note the following facts/comments:

1. Highest marginal tax rates (39.6%) on ordinary income (wages, ordinary dividends, interest, etc.) equal their highest levels in 30 years. Furthermore, 30+ years ago, the highest marginal rates were a lot higher, but inflation adjusted these rates were imposed on income in the millions and there were so many deductions allowed that very few were actually hit with these rates.

2. Capital gains rates (23.8%) are at their highest level in almost 20 years. Although individual cap gains rates were higher 20+ years ago, the corporate rates were lower which has an offsetting impact (I’m not suggesting a 1 for 1 impact because I have no idea exactly, but there had to have been some offsetting impact).

3. Qualified dividend tax rates are taxed at the same rate as long term capital gains and are at the highest they have been in almost 15 years. However, Steven H could make the argument that they were taxed as ordinary income before 2003, so while these rates are they highest they have been since 2002, they are still far lower than what they were prior to 2002. Corporate tax rates were lower though, so again there is some offsetting effect.

4. Medicare tax rates (2.35%) are at all-time highs.

5. Payroll taxes equal all-time highs.

6. State taxes are at all-time highs, with some being through the roof (California’s tax rate on income over $1mil is 13.3% and New York’s state and local taxes are similar).

My basic premise is that the economic system is one large equation with hundreds, if not thousands of variables, with taxation and government spending being two of the most significant ones. Proponents of increasing taxes on the 1% have succeeded and taxes have significantly increased on the 1% over the past several years. Although I could argue that taxes on the 1% should be lower, I am not arguing for that and I am fine with eliminating irrational loopholes like the carried interest loophole which would even increase taxes on the 1% more; however, as I mentioned in a previous comment, I believe most answers lie somewhere closer to the middle and enough is enough. You have succeeded in raising taxes on the 1% and will raise significant revenue as a result. Now please look at the government spending variable and figure out how to compromise.

Reply

Peter January 18, 2016 at 12:40 pm

This does talk to the larger point I was making months ago. For some (Steven H) it is never enough. All that matters is what plays politically – “increases and decreases”. The bottom line numbers are meaningless. When that is the case, then there is no increase that is enough because it ends the ability to cash in the political currency.

The “middle” is not available. It is a win/lose game for the political parties. And it is unfortunate.

The irony that the 1% haters don’t realize is that when you do find success and make incredible money you find yourself feeling and becoming so generous. I know I am far more generous than I was when I was in the bottom 20%-ile. Sure, I can afford to be now – but it is more than that….you want to help others that are less fortunate. The problem that people who are extreme left-leaning like Steven H don’t seem to realize is that it is the government’s inefficiencies and behind-the-scenes promises to corporate America that stand in the way of this exchange truly happening. It is not helping the struggling I oppose – it is the Federal government’s facilitation of it that is – and frankly always has been – a total disaster.

Reply

Steven H January 18, 2016 at 9:04 pm

Cole, perhaps I took the “High enough for you, Steven H?”, as a complaint, when maybe was not intended specifically that way. That’s neither here nor there in the discussion. Anyway, no offense was taken or intended.

Yes, many rates are relatively high in recent historical terms, especially on the 1%.
My point in posting the table is:
For 36 of the 61 years covered by the table (since 1955), capital gains rates were 25% or higher than today’s 23.8% (including the 3.8 Medicare surtax). The table was just offering perspective on today’s rates, which are high in recent history but low relative to most of the last 60 years.

Also, while the tax rates you reference are indeed higher relative to the last 20 or 30 years, I think it is worthwhile to remember this:

– We have not raised enough revenue in most years since 1981 to pay the government bills or lower the debt/gdp ratio. Except under a few years of Bill Clinton, deficits have soared BECAUSE of those low tax rates. Yes, of course there was spending, by both parties. And defense buildups and unnecessary wars and all that. But without those irresponsibly lowered tax rates of the last 35 years, we would not be having to pay the piper with the higher tax rates necessary today.

– And when the richest 1% (especially the investors) have benefitted extraordinarily over those 35 years from the low tax rates and business-friendly policies and deregulated economic systems, with huge increases in income and wealth relative to the rest of the country, all while the treasury is being depleted and both public and private debts are growing, it seems more than a little disingenuous for them to complain that they have to give back when the bills come due. They have received almost all of the gains which built up the debt in the first place.

– If the distribution of income in this country had not shifted so much money from the middle class to the rich, there would not be nearly so much need for the poverty programs and medical assistance that costs the government so dearly.

Cole, by the way, I really like that you are bringing data, facts, and statistics to this forum. And you have several good points, such as many state tax rate increases being quite high. I agree the economic system has many many variables. I know that federal taxes have gone up, and I don’t have all of the data from the last couple of years because it does not seem to be compiled yet. I am not posting old data from 2012 by choice. It is just what is available. And understand that I do not hate bankers, investors, lawyers, or anybody in the 1%. Nor do I want to punish success or tax anyone into oblivion.

But I think that an impartial observer looking at the status of our economy, and the distribution of wealth and income within our population over time would come to the conclusion that the wealthiest in this country have been getting a really sweet deal, and have been prospering not only from their own efforts but partly or even mostly at the expense of efforts of the rest of the population. For most of the country in the last several decades, wages stagnated or declined, education and medical costs increased, medical care availability was declining (pre-ACA), and there have been increasing cycles of banking and economic malfeasance costing the public billions if not trillions, and there has been a small population coming out on top.

You may not see it that way, but many do.

Reply

Cole January 19, 2016 at 1:06 pm

Just to be clear on the numbers -the 3 largest sources of taxable income are wages, long term capital gains, and qualified dividends. Over the past few years, the highest marginal tax rates: 1) on wages have gone from 35% to 39.6%; 2) on long term cap gains and qualified dividends have gone from 15% to 23.8%. If we use your information, which indicates that the effective federal rate on the top 1% was almost 23% in 2012, it is simple math to assume that that effective rate is likely now 5% to 7% higher for the top 1% (depending on the weighting of the income). So, the 23% effective rate on the top 1% is now 28% to 30% which is dramatically higher than it was in 2012 and should generate substantial revenue as a result. Again, this doesn’t include state tax rates also being at all-time highs. The tax system is now even more progressive than it has been in decades.

Let’s assume I agree with your historical assessment that rates were too low for a period of time. Great, but now you have succeeded in raising the effective tax rates on the top 1% substantially over the past few years. Do you think it is possible that the same impartial observer you mention would conclude that maybe we should focus on the spending side now? A truly impartial observer would not require one side to completely compromise with the other side doing nothing.

Reply

Peter January 20, 2016 at 6:27 am

Especially when the last two administrations have DOUBLED our spending. 2015 Federal spending was more than 2x 2000 spending.

Reply

Steven H January 20, 2016 at 8:35 pm

Just to keep things in perspective …

In those 15 years from 2000 to 2015, the economy grew by 75%, despite the great recession, and population increased by 13.5% and inflation increased by 37.6%. Real per capita (adjusting for inflation and population) spending went up by just 34.9% in that time period, not 2X. And actually it went up that amount in just the 9 years from 2000 – 2009, and has declined since.

Real per capita federal government spending has actually declined about 4.9% in 5 years from 2010 to 2015, and it had declined another 3.9% from peak recession spending in 2009 to 2010, for a net decrease of 8.8% under Obama.

Avoiding the anomalous economies of 1981, 2000 and 2009-10, we can compare 10 year intervals in years ending in 5, just to get our bearings.

2005-2015 – real per capita spending increased 15.2% (increase of 26.3% occurring in years 2005-2009 with declines afterward)
1995-2005 – real per capita spending (RPCS) increased 19.6% (only 2.1% of which occurred in 1995-2000)
1985-1995 – RPCS increased 9.2% (actually a 10.3% increase from 1985 to 1992, with a decline in spending afterwards)
1975-1985 – RCPS increased 41% (13.9% just from 1981-1985, Reagan’s first 4 budget years)

The point of all these numbers is just to get some perspective. Saying the raw dollar spending doubled over 15 years can seem outrageous. While it’s a correct mathematical statement, it does not account for other factors.

Spending went up faster than GDP over those 15 years, which is a bit of a problem, but spending/GDP in 2000 was at a low of 17.4% GDP, a low rate not previously seen since 1974. So it’s a bit of a red herring as a reference baseline. Spending in 2015 was 20.5% of GDP, which is less than the average spending in either of Reagan’s 2 terms or of George HW Bush’s 1 term.

Spending did decline to less than or equal to 20% from 1994 to 2007. Unfortunately, tax cuts in the 2000’s cut revenue from a healthy 19.7% of GDP in 2000 to a 45 year low of 15.3% of GDP in 2004 (not seen since 1959), which then dropped even lower to 14.5% GDP in 2010 from the recession.

Sorry, for going on and on. These numbers fascinate me and I keep thinking of new things to look up. The bottom line is that today’s spending is not so extreme. It has gone up about 15% over the last 10 years in RPCS (considerably less than 2 of the 3 previous 10 year periods since 1975) and is now at 20.5% GDP, which is less than the averages in the 80’s or early 90’s.

In fact, after years of RESTRAINING RPCS growth, it is probably time to increase spending again. Our infrastructure is in need of repair, our education system needs revamping, and military budgets are under pressure from continuing world conflicts. We need to invest wisely now so that our economy has the necessary ingredients to grow again. Because that is what will really save the economy.

Reply

Steven H January 20, 2016 at 8:39 pm

Bad ending statement. The economy growing will save the economy? I meant that the economy growing will save the COUNTRY. Sorry ’bout that.

Peter January 20, 2016 at 8:45 pm

But until you get serious about reducing spending – or at least entertain it – there is nothing more to discuss with you really. We have already accommodated your request which is to raise taxes significantly on a small portion of the population. What you want has already been done. Like Cole says, now we must address the other side of the balance sheet rather than just spend the extra revenue to win votes.

Steven H January 21, 2016 at 11:44 am

You think taxes have gone up enough and that we need spending cuts/restraints. I think taxes of only gone up part way to where they need to be and that real per capita spending has already been cut and restrained for years. I think we need more govt investment now, not less.

But lets say that the penny pinching majority in congress has missed some low hanging fruit that can actually be cut without hurting the middle class, or damaging our infrastructure. What would thatbe? I think single payer healthcare would be a costsaver. It is for Canada.

Part of the problem is that you think programs like social security are a failure while I think SS is a resounding success.

Steven H January 21, 2016 at 7:17 pm

So where could you save several hundred billion from the budget?

Peter N January 21, 2016 at 8:14 pm

” I think we need more govt investment now, not less.”
????
If you want a good example of gov investment look at China and the mess they are in. Too much of their investment goes into things that don’t have any return on investment.

Steven H you just don’t get it. Investment is not the key word. Investing profitably is where its at but that isn’t the governments priority.
The US gov should stick to spending on those things mandated by the US Constitution and leave all else to the states as specified by the 10th admendment.

Notice, Walmart raised wages and now will close many stores.

Cole January 21, 2016 at 9:07 pm

Steven H has become my part of my weekly entertainment. Last year in one of his posts he described himself as “proudly liberal; fiscally middle of road (advocating responsible balance of government revenue and spending)”. Wow if that’s true, it would be scary if he were fiscally liberal – I guess it would be flat out socialism? Funny stuff.

Peter January 21, 2016 at 10:13 pm

Haha – I have learned to view it the same way as well. As entertainment. Same way I look at Glenn Beck or Hannity, just on the other side. Infotainment if you will. Much easier to deal with from that perspective and a lot less frustrating.

James January 22, 2016 at 6:26 am

Very true Peter N. The government “invests” in things for political gain not for return on investment. Don’t see that changing any time soon…. No matter how high you raise taxes, the government will just spend more. Never a popular platform to run on to spend less because of the reply Steven H said….someone will always say “how can you cut XXX?” “Don’t you care about XXX?” So stupid.

If we stay with 14 aircraft carriers (nobody else has more than 2) and don’t fund building of 2 more, we aren’t “weakening our defense” and “opening ourselves up to attack”. But that’s how it will be sold. Just as an example.

Peter N January 22, 2016 at 8:27 pm

Steven H must be a Bernie Sanders support. A socialist. Socialist don’t know how to do things profitably either.

“The problem with socialism is that you eventually run out of other people’s money.”
? Margaret Thatcher

Steven H January 21, 2016 at 7:10 pm

News of Interest:
CBO Report quoted below; Summary points I find interesting:
– Military spending increase is first increase in 5 years
– Discretionary non-defense increase is about 4%
– First increase in year to year deficit since 2009
– Debt will increase (spending increases > revenue increases)
– Revenue will increase from increased tax rates, bracket creep, and economic growth
– Corporations got a tax break from extensions of expired tax provisions (!!!)
– If current law stays constant, spending will rise from 21.3% GDP in 2016 to 23% GDP in 2026. Not catastrophic, but probably requires some attention; either tax increases to pay the bills, or a plan to trim some budget items.

From the CBO – Jan 19, 2016
##The Budget Deficit for 2016 Will Increase After Six Years of Decline##
The 2016 deficit will be $544 billion, CBO estimates, $105 billion more than the deficit recorded last year. At 2.9 percent of gross domestic product (GDP), the expected shortfall for 2016 will mark the first time that the deficit has risen in relation to the size of the economy since peaking at 9.8 percent in 2009. About $43 billion of this year’s increase in the deficit results from a shift in the timing of some payments that
the government would ordinarily have made in fiscal year 2017, but that will instead be made in fiscal year 2016, because October 1, 2016—the first day of fiscal year 2017—falls on a weekend. If not for that shift, the projected deficit in 2016 would be $500 billion, or 2.7 percent of GDP.

Federal outlays are projected to rise by 6 percent this year—to $3.9 trillion, or 21.2 percent of GDP.

Discretionary outlays are projected to be $32 billion higher in 2016 than they were last year. That upturn results largely from the Bipartisan Budget Act of 2015 (Public Law 114-74), which increased statutory limits on discretionary funding, and from the resulting appropria- tions for 2016, which were equal to those limits. According to CBO’s estimates, discretionary outlays for national defense—in their first increase in five years—will edge up slightly this year, and nondefense discretionary outlays will climb by 4 percent.

CBO expects federal revenues to rise by 4 percent in 2016—to $3.4 trillion, or 18.3 percent of GDP. That overall increase results from growth in some sources of revenues and declines in others. Revenues from individ- ual income taxes are projected to rise by 5 percent—more than the percentage increase in nominal GDP—because people’s nominal income will increase and also because their income will rise more than will the tax brackets, which are indexed only to inflation. That phenomenon, real bracket creep, occurs in most years when the econ- omy expands. Economic growth also will contribute to a rise of 3 percent in payroll taxes, CBO estimates. In contrast, corporate income taxes are projected to dip
by 5 percent, largely because of recent legislation (the Consolidated Appropriations Act, 2016, P.L. 114-113) that extended several expired tax provisions retroactively to the beginning of calendar year 2015. Revenues from other sources are estimated to increase, on net, by
9 percent, primarily because of recent legislation (the Fixing America’s Surface Transportation Act, also called the FAST Act, P.L. 114-94) that increases remittances to the Treasury from the Federal Reserve.

In CBO’s projections, federal outlays remain near 21 per- cent of GDP for the next few years—higher than their average of 20.2 percent over the past 50 years. Later in the coming decade, if current laws generally remained the same, growth in outlays would outstrip growth in the economy, and outlays would rise to 23 percent of GDP by 2026. That increase reflects significant growth in man- datory spending and interest payments, offset somewhat by a decline (in relation to the size of the economy) in discretionary spending.

Full report here
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51129-2016_Outlook_Summary.pdf

Reply

Dave January 29, 2016 at 8:49 pm

The issue is that in SF Bay Area California we need dual income households making $450k (225k ea) just to afford to live and take care of our kids. Now if you include the 13% Ca state income tax rate plus this 40% Fed rate, we are now paying 53% in income taxes. This does not include the 9% sales tax or 1.25% property taxes. So any money that is spent is taxed at 62%. This has to stop. It’s unbelievable and causes companies to struggle to keep up with the demand of salary increases to cover cost of living.

Reply

Peter January 30, 2016 at 8:24 am

True. Also add in the Mello-Roos tax if you are in a new development. I really don’t think the complainers realize all the taxes that the 1% pay and how they add up.

Reply

Steven H February 2, 2016 at 7:53 pm

You are both pointing out the extreme cases. Yes, California taxes are higher than other states, both for the 1% and for the 99%. I don’t understand how any normal wage earner can or wants to live there.

And yes, there are inequities within the upper 1%, with wage earners paying much higher tax rates than investors. So why do the wage earners still defend the low taxes of the investors? If the federal income tax on rich wage earners is 35% to 39%, but the AVERAGE rate for the upper 1% is 20%, then why not beat up on the low rate paying investors and hedge fund managers rather than trying to cut Medicare and kick people off Obamacare? Half of the income of the upper 1% is in the upper 0.1% and half of that income is in the upper 0.01% (approximately). So if effective federal income tax rates averaged 30% for the 99 to 99.9% group, 35% for the 99.9 to 99.99% group, and 45% for the upper 0.01%, most of the rich posters here would have tax rates going DOWN to 30%, and the effective rate for the upper 1% overall would go UP from 20% to about 35%. Any objections? Your tax rates go down and the freeloaders paying less than you pay a more equitable share. What’s wrong with that?

Reply

Peter February 3, 2016 at 7:51 am

I have said at least a dozen times that your vitriol should be directed at the .001% – but you continue to attack the 1% – most of which is made up of successful people who have worked their way up from the bottom and are now getting crushed by high tax rates.

Problem is your rhetoric has to include the entire 1% – there isn’t enough money in raising taxes on a few thousand people to pay for all the government’s spending – and it will never happen anyway as those are the people that pay for elections and rig the game.

Reply

Steven H February 4, 2016 at 10:23 pm

Peter, clearly the 0.001% is a bit smaller population than is useful. And, despite my colorful language (included for emphasis and not emotion) about freeloaders, vitriol is not the point.

I have tried to be clear that discussions about the 1% are generalizations and are a convenient statistical divide. The upper 1% have more than doubled their share of all income. That does not mean every individual in the upper 1% has doubled their share of all income. Also, as pointed out in recent discussions, some people have incomes of $500K entirely in wages, and others have $500K income entirely from investments or carried interest. Their tax burdens are completely different. And as the incomes increase the PROBABILITY of it being dominated by investment incomes increases as well. But it differs from individual to individual.

Generalizations help us under the problem, but they should not be used to suggest every individual is equally represented in the larger group.

What I am suggesting is that it is economically possible, if politically difficult (of course), to raise taxes on three tiers of the upper 1%, such that wage based tax rates on high incomes could actually go down, but added revenue to pay down debt would still be obtained. I just showed how you could increase effective tax rates on upper 1%, primarily by increasing rates on capital gains that do affect investors in the lower tier of the 1%, but mostly impact people in upper 0.1%. If this increased the AVERAGE effective tax rate of the upper 1% by 10 to 15% (again, not all individuals see an increase), then we raise a significant amount of revenue. Total Personal is approximately $15 T. Upper 1% has 20% to 25% of all income. Let’s split the difference and say about $3.4 T going to the 1%. 10% to 15% of this is $340B to about $500B more to the government. That just about equals the projected deficit for FY 2016.It would certainly bring the deficit smaller than GDP growth, thus lowering Debt/GDP and putting us back on path to economic sanity.

So what I suggested does NOT add crushing taxes to rich wage earners who have worked their way up, but it does pay down the deficit by taxing the wealthiest and most able to pay.

Again, this is still a broadly expressed plan, with many details unexplained and lots of political difficulties. As you point out, increasing taxes on those who pay for elections and rig the game is a difficult exercise. But then again, Democracy is always a difficult game. But it is one where the people are given political and legal tools, and are expected to use them to exercise control over small powerful groups who seek to gain unfair advantage.

I don’t expect you to like my plan or advocate for it. What I reasonably desire is for you to at least acknowledge the economic feasibility of increasing taxes on the upper 1% in such a way that we can pay off most of the deficit. And without putting the effective federal income tax rate over 45% on any group.

James February 4, 2016 at 10:08 am

Because not everyone makes every life decision based on taxes. Job opportunities – great weather – progressive thinking…..

Reply

Cole February 5, 2016 at 3:52 pm

Steven H: I’m not so sure that these are extreme cases as there is a higher concentration of folks in the top 1% in California and NY dealing with these issues. Nonetheless, you admit that there are inequities within the 1% so no need to go into that any deeper (at least not yet).

Where it’s clear that people are getting upset with you is that they do not feel you are willing to listen to any view but your own and will not even fractionally consider moving off of your position. Let’s test it.

Big picture, you have argued that the government should spend more and raise taxes to do so. Assume that I agree with you that we should raise the highest marginal LT cap gains rate and qualified dividends rate by basically recharacterizing this income as ordinary income and taxing it at the highest rate. Then assume that I agree with you that we should close stupid loopholes like carried interest. Further assume that it is acceptable to raise highest marginal tax rates on ordinary income for the top earners – say for all income over $2-5mil and then even higher when you get into the really big numbers. This would be a sizable revenue boost as marginal tax rates for the top 1% would now be dramatically increased (and no longer skewed by those at the very top of the 1% category). Is that enough? If not, are you suggesting that we should continue to spend and simply raise the tax rates on higher earners until there is enough revenue to cover expenditures? Or, are you willing modify your position slightly to say that the above would be enough of a tax increase, any more would be unfair, and we should then reduce spending to make the math work? I’m absolutely willing to compromise and think many others are, too. But, if you aren’t willing to move off of your position at all, then there isn’t much to talk about because you can’t argue with someone who isn’t willing to take a holistic approach to problem solving. This is the problem with our country, far left and far right draw a line in the sand with extreme views (even though neither thinks their views are extreme) and won’t budge an inch.

I hope you will address the questions as laid out, but expect you might reword some of this in making your counter argument. If so, please at least answer the simple question: Should we simply just continue taxing higher earners to pay for all government spending, with no caps on how high you would have those taxes go?

Reply

Steven H February 2, 2016 at 8:59 pm

Regarding the shameless post-baiting just up about 5 posts on Jan 21-22 from PeterN, Peter, James, and even new poster Cole. Don’t you have anything substantial to post? Do you miss me so much that you are trying to bait me with insults to come back and say something?

Posting insults against me does not advance this thread in the least. I am not your straw man. Perhaps some of you miss the more congenial language of JTM, Man-Of-Reason, Aspiekid, Normal Joe and some of the other posters who gave up on talking to you guys. So do I. But you all seem to forget that they posted pretty much the same perspective and arguments that I continue to push. Let me remind you:

“There needs to be balance, and sorry, if you take a longer view than the past decade, your taxes have NOT raised. We have simply moved from a point of historically low tax rates to back to where they were previously.” – JTM

“With the weakening of unions, fewer workers have a voice into fair compensation and owners of companies or stockholders and company executives can and do take a bigger piece of the pie for themselves. Because of my situation, I must work harder and longer hours than my boss in order to make ends meet and save for the kids’ college expenses coming up. Although this isn’t a union shop, nor is my occupation a union position, higher union wages lifted all boats to compete, even mine.” – Aspiekid

“Why do some people dislike wealthy? Because some wealthy people belittle everyone else and call them lazy or stupid often while making their living off the backs of their labor or selling products to them. They don’t treat them as a human being. ” – JTM

“A couple of points that deserve thought. At the heart of your presumption that you have all the rights to whatever you earn is the implication that wealth is infinite. On any given day wealth on one level, and income on the other is finite. By definition, if one is to receive more, another must receive less. If you receive more, someone, somewhere is either losing or being prevented from maintaining their ability to grow proportionately. This is the foundation of the current debate regarding income distribution.” – Normal Joe

“And I’m tired of people saying others don’t deserve a livable wage because they didn’t go to college or tech school or something like that. Not all jobs require any of the sort, yet they are required for our society to run well for the rest of us. These jobs should pay a reasonable wage. Many of these people work very hard, harder than many with an education, they have to. Who will do these jobs once everyone is educated?” – JTM

“Humans are the most intelligent species on the planet. So naturally one would think we should have a more intelligent way of thinking. Instead of behaving like the rest of the animal kingdom with the attitude of “everyone for themselves”. There is enough wealth and resources in the world for every single person to be living above middle class conditions. Do people work hard for their millions? Sure some do, and that would be fine if no one else in the world was struggling to survive. We are all human, we are all evolved, we all need a new way of thinking. ” – Austin S

“I believe the point being made is that we are losing the middle rungs of the ladder. Many believe (myself included) without a healthy, robust middle class, we all lose economically and it makes it harder to make it to the upper classes. The wealthy are generally better off with a healthy middle class. We cannot all be educated to PhD level and then have that worth anything, and the jobs below will still remain, they need to be done even if by a PhD. Unless you want to move back to where we have a ruling class and surfs (no substantial middle class), people need to be paid a reasonable wage no matter the job.” – JTM

“The problem is the accelerating income disparities as measured by incomes of the top earners compared to the middle class. No one cares if incomes double at the top so long as the average wage earner shares in the credit for increased productivity by having his income double also. But when per capita productivity in this country doubles and the top 10% triple their incomes while the other 90% take a 6% decrease, something’s very very wrong.” – Man-of-Reason

“You could also take the view that you are fortunate because taxes have decreased to the point where you are livid over the current rates. We still have historically low rates. When will you feel taxes have been cut enough for you? When does that stop?” – JTM

“In 1811, two years after Jefferson left the Presidency, Jefferson wrote a letter to General Thaddeus Kosciuszko, a hero of the American Revolution. Jefferson said that he supported taxes (then tariffs, since there was no income tax yet) falling entirely on the wealthy. As Jefferson explained: “The farmer will see his government supported, his children educated, and the face of this country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings.”” – Man-of-Reason

“I was pointing to the posts on here by those who claim to be wealthy. Many of them, in one way or another, claim the poor should just get educated and get a better job. Sounds simple, yes, but reality is there are other things holding them back also. It’s not simple stupidity or laziness. They [the rich] use this as a reason that they [the poor] don’t deserve reasonable pay, though they are performing a job the rest of us count on and many of us wouldn’t do. When the comments from the wealthy on here show a different attitude, I’ll change my opinion. Outside of here, I know many wealthy are very generous individuals and try to help the less fortunate and pay good wages for menial jobs. There are also many who feel otherwise and are quite vocal about it.” – JTM

“Whether reducing the budget or taxing more, it really all about reducing the deficits and national debt. It’s about who pays too and that’s what you’ve been dancing around in this debate. You don’t want to pay. You want someone else to pay.
Reduce SS and Medicare and the elderly pay more. Reduce unemployment insurance and food stamps and those recently laid off pay. Reduce Medicaid, SSI and welfare and the very poor and disabled pay. Reduce the FAA, CDC, FDA, etc., and we all suffer. Reduce aid to education, student loans, Head Start and America’s future in a global economy fails. So don’t give me some simple minded solution of, “just cut spending”. Tell me where, who will pay, and why that’s more fair than asking those most able (You?) and for whom the past thirty five years of tax cuts became the bonanza that increased their wealth many times more than the rest of Americans.” – Man-of-Reason

So when railing against Steven H as the guy who is unreasonable, the guy who doesn’t get it, the guy who is only good for entertainment, the guy who doesn’t understand how the economy works, just remember that I am representative of precisely the same arguments of the fine posters many of you claim to be missing from previous pages. But I am the guy still here and ready to engage you in honest discussion, if you can get off your high horses of feigned superiority and back-slapping insults and actually have a discussion.

Rant over.

Reply

Peter February 3, 2016 at 8:00 am

This is excellent. For the most part, these are fairly thought out points that illicit productive discussion. Only JTM occasionally shares your crass single-minded approach that either shuts down the dialogue or makes us all laugh at you. (And that is only occasional from JTM) The rest of the posters you quoted were intelligent, informed and interesting and productive to talk with – even if they have a different perspective.

However, much like the political debate at large in our media and on our debate stages, the loudest most ridiculous (and often the least informed) voice wins the day. So we are indeed left with you as you drowned out the thoughtful opinions of the other posters and turned the dialogue into the same partisan crap that dominates talk radio.

Reply

Peter February 3, 2016 at 8:11 am

If I were you I would read those quotes over again. And maybe even go back (like you evidently did) and see that the difference between you and them is that you completely lack respect for conservatives, the wealthy, or any differing opinion.

I had a great discussion going with MOR years ago where I thought we were both trying to understand the opposite point of view. It was very enlightening to me personally and helped me see things from a different perspective. We even worked through some solutions (along with Ken and many others) to find a realistic, common ground solution.

You will never find what you are looking for until you open your mind to the perspectives of others – and give them the respect that they might be “right” and that you might be “wrong”. You don’t have it all figured out – and even the most obvious errors you have made in your argument that have been called out you have not listened to. People’s personal experiences (the insurance industry, Wall Street, taxes the 1% pay, small business owner experiences) are debunked because you read an article that says differently.

You are not alone – this is the kind of groupthink that dominates the internet. Like Bill Maher said on his show this week, the internet started as ‘the world of information at our fingertips’ and has devolved into a ‘web of lies’. There is almost no worldview you can subscribe to that you can’t find an avalanche of supporters and supporting evidence online. The growth of ISIS is a great example of the power of this. Donald Trump, Ted Cruz, Bernie Sanders…. more examples of this.

Thinking for oneself and listening to other people’s experiences with an open mind is the only way we truly become more educated and informed. Personally, I feel like I have become more informed due to this comment thread. In my opinion, you have contributed very little to this, unfortunately – other than stifling the discussion and representing the dogmatic extremist view that frustrates me the most.

Reply

Steven H February 5, 2016 at 12:08 am

Peter, I have been rereading these quotes, and they are quite good. I miss these guys. Perhaps I have not been as polite here somehow, but I also am baffled at times as to how my posts are interpreted or reacted to.

Maybe I am too willing to add the provocative phrase, but should use of the phrase “bonus income” really derail an entire conversation? Of course there are also words that irritate me. Like “Zero-Sum-Game”. Or “groupthink”. But I do try to address the issues behind these words directly and not let them distract too far from the point at hand.

But, honestly, if I were to grab a few random posts of my own, how do they differ from the other posters in terms of respect or adding to the discussion?

E.G.:
>>>>
Peter =======
You also don’t believe that the middle class’ perceived struggle is due to automation, a changing economy, their own lack of skills or work ethic.
===========
[Steven H] In order: Yes, yes [I actually DO believe], no, and no [you are correct I don’t believe]. The no’s are because the MIDDLE class clearly does NOT lack skills or work ethic. The yes to automation and changing economy simply acknowledges that the economy is changing, as it has every decade in this country’s history. The difference in the last 35 years (which so closely echoes the gilded age in latter 19th and early 20th century) is not that the economy is changing, but that we are allowing the wealthy to benefit disproportionately from these changes, largely through new rules established of, by, and for the wealthy.

We are a nation for a reason. We vote for a reason. We band together for a reason. We create this country’s infrastructure, policies, communities, families, schools, banks , governments for a reason. And that reason is to establish a more perfect union, not to let a small percentage of the folks run roughshod over everyone else, using the nation’s resources for their own extraordinary gain.
<<<>>>
Peter =====
The job market, suppressed wages, etc. comes back to my point all along with the lost manufacturing and unskilled labor jobs in our economy due to the information age. The unskilled shouldn’t be “compensated” for this.
=========
I understand what you are saying, but wages are going lower on both skilled and unskilled jobs. The availability of cheap labor overseas drives part of this, as does automation. But another large part of it is the OTHER disparity: negotiating power. Cost of flight training to be an airline pilot is $100K but entry salary is about $20K. Students are paying out the nose for college education, but unemployment of college grads is high, and there are more college grads than ever before to BE unemployed. Amazon forces even seasonal factory workers to sign non-compete agreements limiting there job hiring opportunities for 18 months after the seasonal work. Skilled people are suffering low wages along with unskilled, and companies invoke unreasonable burdens on workers, because the large airlines, banks, stores and other companies have negotiating power mostly unfettered by govt or union limitations.

Companies and their high paid management teams are getting rich off of conditions that simultaneously enable them to lord their power and control over the rest of the country.

Why should the richest and most powerful be compensated highly for the advantages that globalization and automation provide, but the rest of the country is not allowed to benefit from those same advancements, and indeed, is made to suffer because of them?
<<<>>>
Ken, your argument assumes that the reward of capital is a fair return for the risk … or if you don’t like the word “fair” then substitute “sustainable”. I think you can agree that there CAN exist conditions where entrepreneurial risk exceeds the potential reward and thus business growth is slowed. This could happen from market conditions, but also from over-taxation or over-regulation. If you agree, then you must also agree that the converse condition CAN exist: where reward exceeds risk and businesses and business income grow quickly. You may see no downside to this latter condition, but it has a cost: it cannot be sustained indefinitely and the extra reward comes from someplace, and and that someplace is getting depleted.

So are we in a stable economy with balanced risk/reward of capital, or one where risk is under-rewarded, or over-rewarded? How do you think that can be determined?
<<<<>>>>
I see what you are saying here. I agree that there are short term imbalances that even out. But the “long term equilibrium” you describe is accomplished with the relatively long-term rules of the system. In other words, the economy is series of chemical reactions contained within a bottle. Equilibrium of sorts is reached within the constraints of the bottle. But what if the size and shape of the bottle itself is forcing an imbalance that causes the system to fail?

The “equilibrium” we are reaching under the current rules of the system is unsatisfactory to most people. This “equilibrium” pushes money out of the middle class and into the upper management, corporate, and financial sectors. Much of what I hear as arguments defending the status quo seems to be mechanical descriptions of how equilibrium is maintained within this bottle. I understand risk/reward processes, capitalism, and free markets. What I am suggesting is that the bottle itself has been reshaped, and it is making most people less prosperous and a few people very prosperous. What I am proposing is that the bottle be reshaped again to make this country and economy more rewarding for more people.

If actions are found and taken that reshape the bottle to restore prosperity to the middle class, then the whole country will benefit.

So when I say that risk-reward is imbalanced and you say it reaches equilibrium, we are speaking truths from differing perspectives. We have equilibrium within current rules. But I would say the current rules are unsustainable, because they put the majority of Americans at great disadvantage. And in a democracy, the majority eventually gets its way.
<<<<>>>>
But I think that an impartial observer looking at the status of our economy, and the distribution of wealth and income within our population over time would come to the conclusion that the wealthiest in this country have been getting a really sweet deal, and have been prospering not only from their own efforts but partly or even mostly at the expense of efforts of the rest of the population. For most of the country in the last several decades, wages stagnated or declined, education and medical costs increased, medical care availability was declining (pre-ACA), and there have been increasing cycles of banking and economic malfeasance costing the public billions if not trillions, and there has been a small population coming out on top.

You may not see it that way, but many do.
<<<<<

Reply

Steven H February 5, 2016 at 12:45 am

“… even the most obvious errors you have made in your argument that have been called out you have not listened to … ”

I understand how this is frustrating. If you are able to list three (or more if you like) examples of such “obvious errors” that I have ignored, I would be happy to address them.

Please allow me to list some “obvious errors” from others that have never been addressed. These are not necessarily from you Peter, and I don’t expect you to address errors of others. I am simply noting that the blame for such behavior can be widespread.

James: Claimed that [People making $1m still pay more than 40% in Federal income taxes while half of the country pays nothing. That does not “favor the rich”.]
Obvious Error: It’s pretty hard to pay MORE than 40% of income in Federal Income Tax when top marginal rate is 39.6%. Rather than admit this minor technical error, James just shifted the argument and changed his assertion.

Various Posters, including Peter N, James and yourself, Peter, asserted that GDP was not a relevant statistic when considering discussions of Deficits or National Debt. This seems counter to pretty much every economic analysis I can find, and yet none of you sought to defend your position, instead resorting to ridiculing me.

Similarly, I pointed out that you can reduce Debt/GDP by retaining a deficit that is less than GDP growth, and I posted economic articles defending this stance. This assertion was openly ridiculed and the articles ignored. I can understand if people have a different preference in how to pay down national debt, but it is just wrong to deny an economic and mathematical fact of how it CAN be reduced.

There has been a lot of discussion about how markets are effective at assigning wages, but when you (Peter) complained that it was difficult to get new workers into your job market, you blamed the short-sightedness of the workforce in not seeing the career opportunity, and you were angrily offended when I suggested the starting wages should be higher. You claimed I was trying to explain your business to you. This was baffling to me. Isn’t that what the market assigning wages means, that a labor shortage should invoke a higher wage?

Ken tried to tell me that Medicare insurance costs should be evaluated like private insurance costs, on a per policy basis. When I pointed out that Medicare insures people over 65, and private insurance generally covers people under 65, and that his method gives an unbalanced advantage in lower cost to private insurance in a policy to policy comparison, he never answered. I was accused of not deferring to the expert. I respected the expert but he never answered my good question.

And as for the Founders’ quotes issue, it was Ken who first highly praised the wisdom of the Founders and then when I gave Founder’s quotes he did not like, he posted a bunch that he did like. Except that more than half of his were mis-attributed (originally spoken by relatively unknown people long after Founders’ time) or irrelevant. I posted the rebuke in good humor. But rather than accept the fact that he had erred, he left and never came back.

So what are those obvious errors of mine that I ignored?
I would like to address them.

Reply

James February 5, 2016 at 5:49 am

James: Claimed that [People making $1m still pay more than 40% in Federal income taxes while half of the country pays nothing. That does not “favor the rich”.]
Obvious Error: It’s pretty hard to pay MORE than 40% of income in Federal Income Tax when top marginal rate is 39.6%. Rather than admit this minor technical error, James just shifted the argument and changed his assertion.

The top bracket is not 39.6 by the way. There are several federal surtaxes on top of this which can take the bracket even higher. The 3.8% Obamacare tax for example.

Steven H February 5, 2016 at 6:55 am

Ok but the 3.8% obamacare tax just brings capital gains tax from 20 to 23.8 %. If this is a significant tax to a taxpayer it is because of capital gains which bring net effective rates lower than 39.6%, not higher than 40%. I just want you to acknowledge that almost nobody making over a million dollars pays over 40% in federal income tax and that it is difficult to even envision how that can occur with today’s rates and a typical tax avoidance strategy.

It’a small technical admission and does negate your broader arguments which I already acknowledged and discussed above.

It seems important to me to acknowledge our own errors and mistakes as a matter of respect to other posters and to keep the facts straight. If we cannot come to agreement on small technical points of fact, we wi ll neber get anywhere on btoader fiscussions of opinion and philosophy.

James February 5, 2016 at 9:12 am

Wrong yet again. The 3.8% tax adds to all income for those in the 1%. Again you don’t know what you are talking about.

Steven H February 5, 2016 at 10:31 am

Oops. “Does negate” should have read “does not negate”. Sorry about the missing word.

Steven H February 5, 2016 at 11:15 am

James, my understanding is that this investment tax applies to the lesser of net investment income and (modified agi minus a threshold). If you assume cap gain income is 20% tax rate and it is the lesser of the two values, then the cap gain rate is effectively 23.8%. If the other value is the lesser, you may pay a highet marginal rate above 40% on that portion, but that portion is less than half, and the other half is taxed at 20% cap gain. In either case I don’t see how it matches your description.

If you have more insight I am happy to listen. Or I will defer to Peter, who certainly will have more knowledge on this tax.

Cole February 5, 2016 at 2:53 pm

I know I posted a more comprehensive summary previously, but here is a condensed version of highest marginal federal tax rates:
1. Ordinary income (wages, taxable interest, non-qualified dividends, short term cap gains, etc.): 39.6%
2. Long term cap gains and qualified dividends: 23.8% (which includes the Obamacare 3.8%)
3. Medicare 2.35% (which includes Obama’s increase of 0.9% on 1% folks).
4. Social Security 6.2 on the first $118,500 of wages (for W2 salaried employees).

Ignoring self employed individuals, then the only way an individual could pay more than a 40% effective federal rate:

1. You would have to include #1, #3, and #4 above.
2. The person could have very little or no deductions (state taxes, real estate taxes, mortgage interest, charity, etc.).
3. Ordinary income would have to be enormous (haven’t modeled this out, but probably over $20mil).

It’s unrealistic to expect that there are many people who meet the above criteria, but there might be a couple of CEOs or other C-Suite execs in states with no income tax who might get there in a year when they blow out significant non-qualified stock options.

Anyone with sizable LT cap gains and/or qualified dividends clearly wouldn’t pay over 40% as the highest rate is 23.8% on that income.

Self employed folks get hit worse. Without getting into too much detail, they get hit a few percentage points higher.

This isn’t meant to argue that rates should be higher. I just want to make sure everyone here is on the same page so they don’t have to waste time arguing about factual matters.

Steven H February 5, 2016 at 4:16 pm

Thanks Cole. There is a specific question about the 3.8% income tax, though. James claims in applies to all income, and can drive effective tax rates over 40%. I understand from my limited research that it will only affect investment income (raising cap gain from 20 to 23.8%), or it may instead apply to a smaller amount if investment income is greater than AGI minus a threshold. Do you have info to resolve this?

Cole February 5, 2016 at 4:39 pm

The 3.8% is only applied to investment income and will not drive effective rates over 40%.

Steven H February 5, 2016 at 8:50 pm

Cole,
Thanks very much for the detailed replies, and the concise answer for James’ question as well. It helps to get a clear answer from an expert. James doesn’t believe anything I say, so I think he will find the data more credible coming from you.

So James, are you willing to concede on this point? It seems that it is not generally true and would in fact be very rarely, if ever, true that any million plus earners would have an effective Federal Income Tax rate over 40%. Especially for anyone earning under 10 Million or so in wages.

And it does seem my understanding of the 3.8% “Obamacare” tax was about right after all.

James, I’m not meaning to gloat, but after all of your repeated accusations that I don’t know what I’m talking about, you do make me worry sometimes whether I have got things right. It’s just good to know I had a proper understanding of these aspects of the data. Please be more careful when telling people how wrong they are.

Steven H February 5, 2016 at 6:44 am

Part of the point of my last two replies is that I completely agree with your assertion that we need to listen to other arguments, make reasonable attempts to answer objectively to the factual points raised by others, with more factual points to advance the conversation, and to avoid distracting controversy arising from needless insult or already discredited arguments.

Look at my posts just on this page from around December 10 to 30. Can you see how I pursued this approach? James and Peter N repeatedly tried to bait me with insults and obstinance and I consistently responded with polite replies bringing up points to discuss. A few nice threads resulted. But the conversation still ends up with you guys just wasting post space on insulting me as “just entertainment”. Who is being disrespectful here? If you want me to live up to yout stated conversational goals, it would help if you chastise others for their offenses and not just me.

And to be perfectly clear, my post about the points that have not been addressed, both mine and others, is completely in earnest. The refusal some on on this forum to answer my concerns and arguments is abig irritation, and my desire to fully respond to any such offenses on my part is sincere.

Reply

James February 5, 2016 at 9:16 am

The problem is that you don’t respond with any sort of thought. You argue like a defense attorney – countering the prosecution with something that proves your “theory” rather than listening, absorbing and thinking for yourself. You are so worried that your worldview be proven TRUE that you are pointless to talk to (albeit quite fun to have around as others have said).

Since you are such a big fan of going back through the old threads, go back and find instances where you fundamentally changed your opinion or conceded a point to Peter, Ken, Peter N or anyone else you have been opposed to.

James February 5, 2016 at 9:18 am

Never mind…don’t do that. You have already filled this page with enough rehashed stuff. Hopefully others will join and continue the discussion instead of rehashing the discussion that chased everyone away.

Steven H February 5, 2016 at 10:58 am

James, you are much more obstinate than I am. Pethaps you should look back to see if YOU have ever conceded anything. I contend that it is your brick wall attitude, and the similar attitude sometimes expressed by a few other posters that chases other posters away. Please listen to Peters advice and actually listen to the arguments posted and be willing to concede small points when appropriate. Your necessity to never admit any error and never see a different point of view and to rehash old discredited statistics (like using raw dollars in year to year economic comparisons) slows down everybody else and is a big distraction.

James February 5, 2016 at 11:25 am

I’m not defending myself here. For years I was a casual observer and I just miss Peter, Ken, Man of Reason, JTM and all the other people who made this one of the most read comment threads on the topic. I think you ruined it.

Steven H February 5, 2016 at 4:10 pm

You attribute too much impact to me. I hardly think JTM, Normal Joe, MOR, AspieKid and others left due to me. That would make no sense. I agreed with everything they said. Possibly they just ran out of new things to say as the same old arguments kept coming up. But you would have to ask them why they do not post.

Ken left after the Great Founders’ Quote Skirmish. I don’t know why he preferred leaving to just laughing about reposting quotes from a chain e-mail full of bad info. Maybe he doesn’t like losing arguments. I’d be happy to hear from him.

Cole February 5, 2016 at 4:37 pm

These comments are all over the place. I posted the below elsewhere, but the comment might work better here (sorry for the redundancy).

Steven H:
Big picture, you have argued that the government should spend more and raise taxes to do so. Assume that I agree with you that we should raise the highest marginal LT cap gains rate and qualified dividends rate by basically recharacterizing this income as ordinary income and taxing it at the highest rate. Then assume that I agree with you that we should close stupid loopholes like carried interest. Further assume that it is acceptable to raise highest marginal tax rates on ordinary income for the top earners – say for all income over $2-5mil and then even higher when you get into the really big numbers. This would be a sizable revenue boost as marginal tax rates for the top 1% would now be dramatically increased (and no longer skewed by those at the very top of the 1% category). Is that enough? If not, are you suggesting that we should continue to spend and simply raise the tax rates on higher earners until there is enough revenue to cover expenditures? Or, are you willing modify your position slightly to say that the above would be enough of a tax increase, any more would be unfair, and we should then reduce spending to make the math work? I’m absolutely willing to compromise and think many others are, too. But, if you aren’t willing to move off of your position at all, then there isn’t much to talk about because you can’t argue with someone who isn’t willing to take a holistic approach to problem solving. This is the problem with our country, far left and far right draw a line in the sand with extreme views (even though neither thinks their views are extreme) and won’t budge an inch.

I hope you will address the questions as laid out, but expect you might reword some of this in making your counter argument. If so, please at least answer the simple question: Should we simply just continue taxing higher earners to pay for all government spending, with no caps on how high you would have those taxes go?

If you can’t budge based on the above, then I would argue that James is 100% correct. Prove us wrong.

Steven H February 5, 2016 at 9:17 pm

Cole,

I’m sorry to respond late to this one. I don’t always see the replies as do they do end up all over. I’ll reply to this copy since it is farther down the page and more likely to be seen.

First, thanks for the clear post expressing the question.

Second, don’t put too much credibility into the accusations from some on this thread that I am unreasonable and the very representation of all things anti-capitalist. You seem willing enough to let me have my say, but you also sound swayed by those who toss around wild epithets.

Third, let me answer your final question directly and then expound further below:
[Should we simply just continue taxing higher earners to pay for all government spending, with no caps on how high you would have those taxes go?] Clearly, the answer is no. As I tell Peter elsewhere, and Henry below, I have no vitriol toward the rich and don’t care to nail them to the wall or crush them. There is a limit to how much people should be taxed. But taxation AND other labor policy can help to rebuild the middle class, which is the real goal.

Fourth, a little exposition: Yes I think adding tax rates at the 0.1% and 0.01% breakpoints might be about right, as well as taxing capital gains as ordinary income when it gets above some level. The details would certainly have to be worked out.

Investment is also important and there should remain sufficient incentives for investors to take the risks involved. As I worked out in another post, aiming for the effective (not marginal) Federal income tax rates of 45, 35, and 30% for the 3 major tiers of the upper 1% (on the upper 0.01%, the remainder of upper 0.1%, then the remainder of upper 1%), would be a good starting design. My thumbnail calculations show that this would just about zero out the deficit, and would help to more quickly pay down debt. Additional intermediate tiers might make sense within those levels, just to make the curve more regular.

James February 8, 2016 at 9:18 am

If so, please at least answer the simple question: Should we simply just continue taxing higher earners to pay for all government spending, with no caps on how high you would have those taxes go?

James February 4, 2016 at 10:20 am

LOL – not sure how my reply to the other posters in the Jan 20-22 thread was shameless post-baiting. Whatever….

And in reference to this nonsense below:
James: “No matter how high you raise taxes, the government will just spend more.”
Steven H: Not really true. Wasn’t true from end of WW2 through Carter. Wasn’t true for Clinton. It was only really true for Reagan, Bush, and Bush 2. (Obama’s term doesn’t count)

From 1946 (the year after WW2 ended) to today, total federal spending increased from the prior year 90% of the time. The only ones where it didn’t were:
1947 – down 37.5%
1948 – down 13.7%
1954 – down 6.9%
1955 – down 3.4%
2010 – down 1.7%
2012 – down 1.8%
2013 – down 2.3%

SEVEN years out of 70.

Reply

Steven H February 4, 2016 at 9:39 pm

James,

I am shocked, SHOCKED, I tell you that government spending increases year to year. Despite population increasing every year, inflation increasing every year, and the economy growing almost every year, I agree that we should be spending no more in total actual dollars than 1947.

Not.

Please stop using absurd arguments. You can be more clever than that. Every analysis of national economies looks at spending and debt relative to the size of the economy of that country. It’s not that different than home economics. When you are right out of high school or college, and single, you spend differently in your household than when you have 3 kids, a mortgage and 25 years at a successful job. You don’t sweat that household spending increased each year. You look at what you can afford.

Even if you have debts from a mortgage and car payments that are larger at age 50 than your entire salary was at age 20, it is nothing to worry about if you control debt relative to the size of your income.

Debt was paid down relative to the size of the economy under every administration Post WW2 until the Great Recession, except under three Presidents who thought cutting revenue was more important than paying bills. (Debt/GDP also went up under Ford, but some treat his economics as combined with Nixon, since his was less than a full term.) It is just not true that the governments under Truman, Eisenhower, Kennedy, Johnson, Nixon/Ford, Carter, or Bill Clinton, overspent relative to revenue when you properly evaluate relative to the size of the economy.

Reply

James February 5, 2016 at 9:21 am

The numbers I posted are still true.

Reply

Steven H February 5, 2016 at 10:41 am

But the numbers are almost meaningless. It may also be true that military spending in 2015 exceeded the dollar cost of US WW2 spending ovet the duration of the war. But quoting such statistics is not a useful evaluation of spending. It says more about inflation than anything.

The numbers and stats you quote do not advance your underlying arguments, nor express anything to be concerned about. They seem to be a distortion to overstate government spending. And, as such, they don’t really add meaningful data to this discussion, do they?

James February 5, 2016 at 11:23 am

Then the same is true of the revenue numbers. And you didn’t say Debt/GDP or some other qualifier – you refuted the comment “No matter how high you raise taxes, the government will just spend more”. That part is absolutely, 100% accurate and the numbers back it up.

Steven H February 5, 2016 at 9:36 pm

As for the statement, “no matter how high you raise taxes, government will just spend more”, I will concede that it is technically true that raw dollar US government spending goes up in most years.

Of course that is true whether you “raise taxes” or not. Definitions are tricky here. Revenue generally goes up each year, but most people only consider that taxes are “raised” if there is a new tax or a rate increase. Mere dollar revenue increases are not considered tax increases. Thus, “Tax increases” generally are understood to mean tax rate increases, not tax revenue increases.

There were no tax increases under GW Bush, but spending still went up. So your statement, which is as I said technically correct, gives us no insight as to the relation between taxes and spending or even an understanding of spending trends. So again, your statement is correct, but I do not find it useful.

Reply

Steven H February 2, 2016 at 9:12 pm

James: “No matter how high you raise taxes, the government will just spend more.”
Not really true. Wasn’t true from end of WW2 through Carter. Wasn’t true for Clinton. It was only really true for Reagan, Bush, and Bush 2.
(Obama’s term doesn’t count; spending went up due to Great Recession, not to compensate for a previous tax increase.)
And for those 3, the more accurate phrase is:
“No matter how much you cut government spending, the Republicans will just give away all of the savings and then some to their wealthy constituents as tax cuts.”

Reply

Steven H February 2, 2016 at 9:34 pm

Peter N: “Steven H you just don’t get it. Investment is not the key word. Investing profitably is where its at but that isn’t the governments priority.”

One problem is is that there are some in government that think protecting the incomes of the wealthy is more important than reasonable and profitable investment in the country. Putting money into roads and bridges would be a good investment.

“In total, one in nine of the nation’s bridges are rated as structurally deficient, while the average age of the nation’s 607,380 bridges is currently 42 years. The Federal Highway Administration (FHWA) estimates that to eliminate the nation’s bridge deficient backlog by 2028, we would need to invest $20.5 billion annually, while only $12.8 billion is being spent currently. ” http://www.infrastructurereportcard.org/bridges/

But the highway fund is being boosted through economic tricks rather than a straightforward and timely increase in gasoline tax.

And putting money into healthcare and Social Security that supports our population is also investment of the most important kind. US still ranks last in efficacy of healthcare among 11 countries studied in 2010 and 2014 by Commonwealth Fund (Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States), as well as least monetarily efficient. And the only one without Universal care, of course. So if we want to cut healthcare costs, we need to change our system to be more like other more efficient and effective countries and not go back to earlier US system which was as bad or worse.

Reply

Henry February 5, 2016 at 10:04 am

Steven H – to accomplish your goal of nailing the 1% to the wall with taxes, all you have to do is jack up capital gains taxes. The 1% pays 75% of the capital gains taxes and even with Obama’s hike it is still only 23.8%. Just make that 40% or something – or tax it all as income – and you steal that money back from them and even the score. Then you can pay for more free things those that can’t afford it – like health care, education and maybe even get involved in more military conflicts that we can’t afford to fool with at the moment.

Seems like you are barking up the wrong tree with your focus on Federal income taxes. The 1% are already getting crushed there while half the country pays nothing. Just jack up cap gains taxes and eliminate the payroll tax and the bottom half get a completely free ride and the rich get killed. You could even weight it in different brackets so the really rich get crushed harder.

Reply

Steven H February 5, 2016 at 10:47 am

1) I was already talking about cap gain taxes.
2) your language is too cynical and violent to accurately express my position. I am not about nailing to walls or crushing or getting free things. I am about paying down debt while rebuilding the middle class. And having the investors pay back some of the free things they have already been receiving.

Reply

James February 5, 2016 at 11:30 am
Steven H February 7, 2016 at 8:59 am

Henry: “… to accomplish your goal of nailing the 1% to the wall with taxes, all you have to do is jack up capital gains taxes. The 1% pays 75% of the capital gains taxes and even with Obama’s hike it is still only 23.8%. Just make that 40% or something – or tax it all as income – and you steal that money back from them and even the score.”

Henry talks about stealing from the well-off and also uses violent and extreme language that misrepresents and exaggerates any of the views that I or previous more liberal and centrist posters have used.

This is the sort of hyperbole that destroys honest conversation. Cole has wisely pointed out that “the problem with our country, far left and far right draw a line in the sand with extreme views (even though neither thinks their views are extreme) and won’t budge an inch.” Peter has advocated to “open your mind to the perspectives of others – and give them the respect that they might be ‘right’ and that you might be ‘wrong’.” I agree that is the better approach, and we all need to avoid Henry’s example of attack language.

And of course, to address the small substatial content of Henry’s post, the 1% pays 75% of capital gains (if that is the correct number – I have not researched it) because they have most of the capital and receive most of the gains.

Come on, Henry. You can do better than this.

Reply

Henry February 10, 2016 at 5:58 am

My apologies – just trying to help. Thought you wanted to significantly raise taxes on the wealthy. Cap gains is the easier path that is all.

Reply

Steven H February 7, 2016 at 9:10 am

James: “I’m not defending myself here. For years I was a casual observer and I just miss Peter, Ken, Man of Reason, JTM and all the other people who made this one of the most read comment threads on the topic. I think you ruined it.”

I have used more rambunctious language in the past, but nothing like the brick wall mentality that you, and Henry have been using, and that Peter N often uses (though he has actually been calmer of late — Thank you Peter N.) And if you look at my more recent posts of the last months, especially on this page, I am not trying to rile people up as much as have a good conversation of the type you claim to long for.

So James, you SHOULD try to defend yourself. And if you cannot defend your behavior, change it. You seem clever enough to look up a short article about the 3.8% Obamacare tax before making blanket (and incorrect) statements of how your presumptions trump other people’s knowledge. You seem like you can make a coherent argument without inserting personal insults in each post. You can be the kind of poster you would like to read instead of being much worse than the poster you most like to criticize. You can do better. I’m sure of it.

Reply

Steven H February 7, 2016 at 9:53 am

Okay that’s enough with conversation about the conversation. (Would that be a meta-conversation?) Back to the topics at hand.

Cole said earlier: “Let’s assume I agree with your historical assessment that rates were too low for a period of time. Great, but now you have succeeded in raising the effective tax rates on the top 1% substantially over the past few years. Do you think it is possible that the same impartial observer you mention would conclude that maybe we should focus on the spending side now? A truly impartial observer would not require one side to completely compromise with the other side doing nothing.”

Let me attempt an analogy. Ten men are climbing a sequence of ladders. They all start out carrying an even burden of supplies. At some point, one of the men leaves some of his supplies at the bottom of a ladder, and since the rest know the supplies are needed by all, they divide the extra burden among themselves. The lesser burdened man, then can climb ladders faster, and, seeing the strategic advantage he has found, continues to leave more and more of his burden for his fellows to carry. After the lesser-burdened man is several ladders ahead of his fellows, they complain about the disparity. They compel him to reluctantly take back a tenth of the burden he has, over time, abandoned, by having it lifted to his position by rope. OK, he says, but now that I have compromised, you must all climb back down one ladder so I can keep my lead.

This is an imperfect analogy, but I am trying to communicate the different perspective that many might have to your assertion and your question. Of course it is reasonable to compromise and to have a give and take in political plans. Of course, there will be no progress if everyone stands firm like east and west-bound Snitches (if you remember your Dr. Seuss). Of course, the process will take time, decades probably, to dig out of the hole we took decades to dig.

But realize, as we all try to climb our economic ladders, that many still see the net doubling of income shares to the 1%, and the simultaneous tax cuts disproportionately benefitting that group, and the resulting accumulation of the nation’s wealth going to a smaller and smaller population, as equivalent to the wealthy shedding their burdens for everyone else to carry. And now that tax rates have been restored to something closer to, but still less than, rates from the pre-1980 decades, but with no progress on labor unions or labor or trade policy or education costs or the other policy changes required to actually help Americans lessen their burdens and climb the ladder, it seems disingenuous to expect most Americans to trade equally, burden for burden with the 1%. We have run high deficits for decades, primarily benefitting the 1%. We have let the wages of the middle class stagnate or decline, increasing the burdens on poverty programs we all have to pay for. The investors within the 1% may have to increase tax burdens on themselves at HIGHER rates than the 60’s or 70’s to compensate for the low burden they carried for decades.

There will have to be compromises on both sides, for decades to come to recover for the excesses of revenue shortages of the 80’s and 2000’s, as well as the disregard for the middle class in those years and in the 90’s. And their are financial challenges in the Social Security and health care problems that will require compromises, cost-cutting and tough decisions to keep them viable.

But I don’t think the argument can be made that the today’s higher taxes on the wealthiest American are the end of the conversation or of the compromises that must be made by the most well-off. A truly impartial observer would not require one side to take back only a fraction of the burden they have abandoned to others for decades. They might have to carry more than their original share for a time, to allow the rest to recover their strength.

Reply

Steven H February 7, 2016 at 10:07 am

Before someone takes my above post as “proof” that I am just trying to tax the wealthy into oblivion, I have to indicate that that the changes mentioned by Cole would likely be enough for several years. They would likely cut deficits down to manageable levels. And as we continue to address our nation’s economic challenges, there will have to be cost-cutting and probably some tax increases across a broader base. I do NOT believe in the wealthy carrying an ever-increasing tax burden, and I do not believe in infinite government spending. There are reasonable compromises to be made.

And I have to applaud Cole for moving this conversation in a more productive direction than it has gone for about 2 years. Too often, we have gotten mired in the language of the Henrys and their like. If we can talk honestly about compromises and potential solutions, expressing personal experience and perception, but backed up with data, we may all end up enlightened.

Reply

Henry February 11, 2016 at 9:47 am

LOL – not sure how I’m to blame for the conversation hahaha….. only posted a few times and was just trying to support your diatribes by making a totally valid point. Cap gains is where you nail the rich (and as you put it, “take back the excess income” they have taken from the rest of us). Income taxes are barking up the wrong tree. But I’ll go away since clearly I’m screwing up the conversation with my once-a-month comments!

Reply

Steven H February 7, 2016 at 4:23 pm

Here is a post that I found of some interest. It will probably offend some of the rich folks here, but that is not my intent in posting it. Heck, it will probably offend some of the non-rich folks here, but for different reasons. I am posting it because it both enlightened me and saddened me. I am posting it because, if readers can get past being offended by it, it may serve as the basis for a little discussion.

The post basically started because of the rant of some lawyer who claims, despite his household income (estimated at $400K to $500K / yr from his letter), he does not consider himself rich. And he is in that class of people who are very offended at being told they might soon be paying more in taxes. The original lawyer rant is embedded, but there is also analysis of that rant that makes the lawyer look very self-absorbed and unaware of real struggles of people who are nowhere near as well-off as he is.

I am curious whether he posters here feel more sympathy for the lawyer’s position or for the guy who criticizes the lawyer’s rant.

http://delong.typepad.com/sdj/2010/09/in-which-mr-deling-responds-to-someone-who-might-be-professor-todd-henderson.html

Reply

Cole February 8, 2016 at 1:24 pm

I feel no sympathy for either and think both are ridiculous. The person making $400k + is doing just fine and saving toward retirement someday and it doesn’t concern me that he cannot live a more enhanced lifestyle, nor save more for retirement; however, the guys criticizing him seem exceptionally offended and upset by the person saying he isn’t “rich”. Here is the problem as I see it:
1. The law professor making $400k+ is not making a compelling argument at all as it relates to the tax increases for people making over $250k. His assertion that he isn’t rich and then foolishly outlining a budget that most view as lavish is simply clueless in today’s environment. I don’t think he is ridiculous or out of touch for saying he is not “rich” (because he probably means “wealthy” – see below). I think he is ridiculous because he is a law professor and thinks this is a good argument to make against raising taxes.
2. The guys criticizing the law professor were clearly in favor of the tax increases on those making over $250k and are appalled by someone making $400k+ claiming they are not rich. They are entitled to their opinion and I agree that the professor’s argument is very weak, but why such hostility? Why so divisive? It would be simple to discount the professor’s argument with a couple of sentences.

My take: It’s likely the professor construes the word “rich” to mean “wealthy”. If so, he could be absolutely correct when he says he isn’t rich (wealthy). Just because you are a high earner doesn’t mean you are rich (wealthy). It means you make a lot of money each year relative to the rest of US citizens (and the world). If you live in a high cost area, then even if you make top 1% income, it might take decades to build wealth. I think it is absolutely reasonable for him to say he isn’t rich (wealthy). But, using this as the sole argument against tax hikes is clueless. I feel no sympathy for the professor based on this argument. His inability to make a better argument is head scratching because he is a law professor. Ridiculous.

On the other hand, it would have been fairly simple to tell the professor that compared to most he is doing very well and over time he will be able to amass retirement savings greater than the vast majority of US citizens, despite increased taxes. Furthermore, they could have argued that he likely has some kind of a defined benefit pension that will pay him significantly into retirement and is probably worth millions. Tell him his argument is not compelling in the context of raising taxes, but why the attack and why are they so upset with him saying he isn’t rich? Why so quick to overreact? I get the feel that they are more upset with his premise that he isn’t rich (which again could be semantics and is absolutely debatable), rather than his use of this premise to argue taxes shouldn’t be increased on him – which I think is ridiculous. If they want to say that his argument is not very compelling, then great and I agree, but being so upset about someone not thinking they are rich (wealthy) makes me wonder where their hostility comes from. Ridiculous.

Reply

Peter February 9, 2016 at 7:45 am

Totally agree. On both sides it is the kind of nonsense that muddies the argument. Almost everyone feels some level of frustration on their income not being “enough” – and I think the lawyer is expressing that but it is a bit of a surprise that he is using that as an argument for lower taxes.

The hostility against the “rich” is no surprise though. The president, the media and politicians in general have exacerbated this class warfare environment. Rather than focusing on the tiny group of people that make tons of money, take risks that affect the economy, and generally influence policy (like Occupy Wall Street did) – the vitriol has reached a lawyer who makes $400k in a large metropolitan area. He is not the target – nor even a small part of the problem with income disparity.

In a way it is like bashing all Muslims because of ISIS. I think the sentiment the lawyer is expressing is one that I have tried to articulate – that the rhetoric thrown at the 1% is inappropriate, misguided and flat-out offensive. Throwing the anger at the elite corporate tycoons that manipulate markets and control people like Hillary Clinton and George Bush is far more appropriate.

Those people in the $250k-$1m range are carrying the burden of taxes and being blamed for something we had nothing to do with.

Reply

Peter February 8, 2016 at 9:23 am
Peter February 8, 2016 at 1:19 pm

Just as an idea…. this proposal is every bit as feasible as making people between $250k and $1 million in income carry the burden.

Reply

Nicholas February 9, 2016 at 4:51 pm

I make 400k a year selling cars. I’m one of the best car salesman in the country and work 60 hours a week.

Reply

Peter N February 11, 2016 at 12:10 pm

Good for you but being taxed at 39.6% plus not counting other taxes is kind of a disincentive to work over 40 hours a week.
Basically you are working about 24 for the gov each week. 60hr*0.396.
So you are getting taxed on the hours over 40 at a high rate. Do you think that is fair?

Reply

Peter February 10, 2016 at 6:04 am

http://www.cato.org/blog/cam-newton-adding-super-tax-insult-super-bowl-injury

Yet another article pointing out what I feel every day….disincentive to grow my practice if we have Bernie Sanders style upper brackets. This is real.

Reply

Peter N February 11, 2016 at 12:52 pm

That article is a warning to system integrators ( engineers that install and start up new machinery ). These projects can take weeks. Who wants to go to California and have them take all your money?

I will retire asap if Bernie wins. I make enough money from investments but even they will be taxed at high or higher rates if Bernie gets his way.

Reply

Leave a Comment