Who Actually Earns $400,000 Per Year?

by Emily Guy Birken · 1,862 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...

Related Posts

{ 1862 comments… read them below or add one }

jim February 18, 2014 at 5:30 pm

I am self-employed, actually an employee of my LLC “S” Corporation. I am paid a salary from my business account, and pay 28% marginal rate on that income. I then pay both sides of payroll taxes to the tune of around 15%. That is up around 43% in income taxes plus payroll taxes.

Payroll taxes only count for the first 110,000 or so of income. So, those earning $400,000 are paying the same payroll taxes as myself. Plus, if they earn income as “investment income” their tax liability is what now…up to 18% (was 14% prior to 2013).

My 43% income taxes on my income of around $125,000 a year is the same as someone with an adjusted gross income of around $300,000 (if earned through investments).

Thanks IRS for this wonderful pyramid scheme of a tax system!

Reply

JTM March 10, 2014 at 3:40 pm

jim – Your numbers are a bit off. You don’t pay 43% in taxes, that was your marginal rate for a small portion of your income. Since you hit the limit for payroll taxes, you are no longer paying the full extra 15%. Also, there are deductions that “adjusted” your income and the first parts of your income were taxed at lower rates.

Using your numbers and assuming the worst tax case of single with the standard deduction gives $24400 income tax + $16500 payroll taxes, giving a 32.7% overall tax rate. Most likely, you have deductions to bring your rate even lower, but there are still a small portion of the payroll taxes that you’re still paying.

All things considered, though, I agree that investment income should be taxed at a higher rate after a certain level of income.

Reply

Morgus February 19, 2014 at 6:17 am

Mr Jim, I can understand no one is crazy about taxes. Actually the person making 300 k is paying a smaller percent. I believe the 15% self employment tax “caps out” at 125k or so unless they changed the rate. If you can take part of your income as a
“distribution” that could help. The people in the “get screwed” bracket are essentially subsidizing the billion dollar corporations who are technically in high tax brackets, but end up paying an effective rate of 10% or less in many cases, after all the loopholes, credits and other gimmicks are calculated. Hard to believe how well our country got along with a 90% tax rate for so many years.

Reply

Doug Lynn March 3, 2014 at 7:28 pm

The problem with the 90% rate was the fact that almost no one paid it. People think there are loopholes now. Back then the loopholes allowed high income earners to pay less than they do now in many cases.

Reply

marc February 20, 2014 at 6:59 am

How much should a rich person pay? It is great to talk percentages, but a person who earns $1 mln is probably paying $350k in taxes. A person who earns $10 mln (and there aren’t many people who earn either amount) probably pays $3-4 mln. They get the same government services as everyone else yet in the eyes of people who pay lower taxes they never pay enough.

If someone makes $300,000/year in investments they do pay lower tax. But, when they earned the money in the first place, they likely paid 30-40% tax on what they earned. Then they did the prudent thing and invested and get taxed again. But apparently what they pay isn’t enough for some people.

In the end, most wealthy people pay enormous taxes on their income and investments and their heirs pay large inheritance taxes. These same wealthy people generally give large portions of their wealth to charity. Look at Bill Gates and Warren Buffett. In the end most of the wealth they create goes to others including you and me. What is the beef here?

Reply

Lance February 27, 2014 at 8:01 pm

Today the wealthiest 3% of the people pay 50% of the federal taxes and the other 97% pay the other 50%. The marginal propensity to consume of the top 3% is around 0.4 while for the other 97% it is probably about 0.98. If taxes on the top 3% were increased by 50% and those on the bottom 97% were reduced by 50%, it would initially be revenue neutral. However, it would ultimately increase GDP by about 3% and reduce the unemployment rate to around 5%. That change in relative tax burdens would bring the degree of progressivity in the tax structure back to where it was in 1969.

It is not just a coincidence that tax cuts for the rich have preceded both the 1929 and 2007 depressions. The Revenue acts of 1926 and 1928 worked exactly as the Republican Congresses that pushed them through promised. The dramatic reductions in taxes on the upper income brackets and estates of the wealthy did indeed result in increases in savings and investment. However, overinvestment (by 1929 there were over 600 automobile manufacturing companies in the USA) caused the depression that made the rich, and most everyone else, ultimately much poorer.

Since 1969 there has been a tremendous shift in the tax burdens away from the rich on onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers. …”
http://seekingalpha.com/article/1543642

Reply

Man-of-Reason February 28, 2014 at 8:12 am

Excellent article. I learned much. Your definition of depression makes very good sense and puts this one in much better perspective. Thanks Professor.

Reply

Kent March 1, 2014 at 9:07 pm

This article completely fails to account for the increases in tax receipts that resulted from the Reagan tax cuts and the Bush tax cuts. It also fails to account for the Obama tax raises that have resulted in a stagnant economy and record numbers out of the job force. It also fails to account for the Obama policy of sky rocketing debt caused by unshackled, skyrocketing government give-away programs. It also fails to mention that the housing market bubble caused the 2007 depression, and the housing market bubble primarily arose because of Barney Frank and his Democrat cronies creating an artificial housing market for high risk home buyers via Fannie, Freddie, greedy Wall Street bankers, and duped Wall Street investors. The article also completely fails to take into account that the foundation of this country was ‘equal opportunity’ not ‘equal income.’ The only people that talk in favor of ‘equal income’ are socialists, and history demonstrates the economic and social failures of socialism. Not only does socialism fail to account for the prime economic motivator of risk/reward, socialism does not have enough information to make an efficient market. Clearly a more progressively confiscatory tax scheme seeks redistribution of wealth and diverting more power from the individual to the government, i.e. socialism. Thus, the author of the article is promoting more socialism by attrition, which, of course, will only deliver more misery.

Reply

JB March 2, 2014 at 6:14 am

It was an article about who makes 400K, not about taxes.

Reply

Mancrunch March 2, 2014 at 11:12 am

That’s because it’s an objective viewpoint from an economist, not some politically motivated bullshit created for campaign talking points. I have never heard of any nonpartisan reputable economist blame Barney Frank or Barack Obama for this depression, and the article doesn’t advocate any political ideologies such as equal opportunities, which are quite separate from the economic math. Stop regurgitating the talking points you hear from politicians and their surrogates Kent, and start using your noodle to reason.

Reply

Mancrunch March 2, 2014 at 11:15 am

Oh, and tax receipts never got back to the pre bush tax cut levels due to an improved economy. As a matter of fact, we ended up in depression.

Reply

JB March 2, 2014 at 1:54 pm

We did not end up in a depression. It was a recession….stop exaggerating.

Mancrunch March 2, 2014 at 2:49 pm

You didn’t read Lance’s article, did you JB? It’s well worth the read
http://seekingalpha.com/article/1543642

Lance March 2, 2014 at 9:37 pm

“..Many who have been vociferous in criticizing income and wealth inequality such as Paul Krugman and Joseph Stiglitz have not pointed to the increase income inequality as the cause of the depression. Those on the left who might be the natural proponents of a more progressive tax system have not connected the dots. They have a different theory as to the cause of the depression. They are adherents to the regulatory fallacy, the belief that the depression was caused by insufficient regulation.

To determine if someone is an adherent of the regulatory fallacy ask this question: Do you believe that given the degree that the tax burden was shifted from the rich to the middle class, was there any type of regulatory policy which would have prevented the financial crisis? If they answer yes, they are adherents to the regulatory fallacy

In Paul Krugman’s 2012 book “End this Depression Now!” he comes heartbreakingly close to connecting the dots between the reduction in the progressivity of the tax system and the cycle of overinvestment that caused the depression. He states that the book is much less concerned with the cause of the depression than what should be done to end it. His prescription is fiscal stimulus focused on the spending side that has even less of a chance of being enacted than the tax cuts suggested above.

Those on the right have their own version of the regulatory fallacy. They blame the government sponsored enterprises Federal National Mortgage Association Fannie Mae (FNMA) and Federal Home Loan Mortgage Corp. (FMCC) and the Community Reinvestment Act. According to their theory, regulation such as the Community Reinvestment Act resulted in a vast increase in subprime mortgage lending that caused the financial crisis. Possibly the non-bank private entities that originated and securitized the most of the subprime loans mistakenly thought the Community Reinvestment Act applied to them.

A slight variation on the regulatory fallacy is the financial innovation fallacy. As with the regulatory fallacy, both left and right versions, there is a miniscule grain of truth to it. Financial innovations such as credit default swaps and regulatory changes like repeal of the Glass-Steagall Act slightly affected the exact timing of the onset of the depression. However, once the tax burden was shifted from the rich to the middle class it was just a matter of time before middle-class consumers became unable to absorb the increased production and service the debt that accompanied the overinvestment. Different regulatory policies might have shifted the bubble more towards commercial real estate rather than residential real estate or visa versa but the outcome would have been similar.

Blaming regulatory policies and financial innovation for the depression is like blaming the armaments manufactures and soldiers for World War II. In order for the war to occur there had to some weapons made and some soldiers to fight. If those particular armaments manufactures and soldiers were not available, others would have taken their place.

Equally unhelpful in terms of addressing the income and wealth inequality which results in the overinvestment cycle that caused the depression are those who emphasize various non-tax factors. Issues such a globalization, free trade, unionization, minimum wage laws, problems with our education system and infrastructure can increase the income and wealth inequality. However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. It is the compounding year after year of the effect of the shift away from taxes on capital income such as dividends over time as the rich get proverbially richer which is the prime generator of inequality…”
http://seekingalpha.com/article/1543642

Reply

JB March 3, 2014 at 7:13 am

Just because someone calls it a depression doesn’t make it one. We were not in a depression. It was a bad recession, but it could have been prevented if people hadn’t been so greedy in buying houses and banks giving loans to every breathing person.

Lance March 3, 2014 at 11:15 am

An old economics joke is “A recession is when you are out of work. A depression is when I am out of work.” However, the differences between a recession and a depression are not simply how many people are unemployed. It is important for investors to recognize and understand the significance of the differences between recessions and depressions
The key difference between a recession and a depression is that a recession can be ended by monetary policy alone.

If every few years you got the flu and now you had a strep throat it would be incorrect and possibly dangerous to think that you just had a bad case of the flu this year. Over the last hundred years there have been numerous recessions but only two depressions, the depression of 1929-1941 and the depression that began in 2007. The symptoms of strep throat and scarlet fever may be similar to that of the flu or common cold. However, causes of the former are the streptococcus bacteria while influenza is viral. Hence, strep throat and scarlet fever require antibiotics which are useless against viruses. Likewise, believing that the depression that started in 2007 is just a severe recession is quite dangerous to both investors and policy makers. As long as many policy makers appear not to realize the distinctions between recessions and depressions, investors ignore those distinctions at their peril.

The effects of the 2007 depression are much less severe than the 1929-41 depression because of safety-net benefits now provided. Consider the horrendous, though not uncommon situation of a household in 1932 comprised of elderly grandparents being supported by their working-age children with young children of their own, when the breadwinners became unemployed. The 1932 family would be destitute. Today the grandparents would have social security and Medicare benefits. Their working-age children could now collect unemployment benefits for up to 99 weeks. Additionally, the entire family could also be eligible for food stamps, Medicaid, rent subsidies, heating fuel subsidies, free school lunches and other benefits. The 1932 family might also have had a bank account in one of the many banks that failed and lost their savings. Today, Federal Deposit Insurance protects such bank accounts. You might say we are now in a depression with benefits.

The difference between a depression and a severe recession are not just semantic. Recessions occur when the Federal Reserve raises interest rates in an effort to slow down an overheated economy. Most importantly, recessions end when the Fed lowers interest rates. In a recession the pent-up demand for housing and durable goods means that monetary policy alone can cure the recession. Just as antibiotics can be effective against bacterial infections but not against viruses, monetary policy alone cannot end a depression. Furthermore, modest fiscal stimulus and the automatic stabilizers that can hasten the end of recessions cannot end a depression. There can be ups and downs in the unemployment rate during a depression. However, the unemployment rate remains elevated. It was 14.5% in 1940 and 9.7% in 1941.

If we are in a recession, economic activity will fully resume just from the monetary and fiscal stimulus that has already occurred. Ultimately interest rates will rise. However, if we are in a depression, even one with safety-net benefits that mitigate the hardships, interest rates will remain relatively low for decades as was the case in Japan and the USA of the 1930s, where only World War II ended the depression. ..”
http://seekingalpha.com/article/1543642

jeffhre March 17, 2014 at 1:08 pm

That little one sided rant didn’t mention that the housing bubble burst at the end of 2006 and the depression was in 2008, after the still hot economy was faced with gasoline prices at nearly $5.00 a gallon, leaving few industries with a viable business plan.

Reply

jeffhre March 17, 2014 at 1:10 pm

Oops, wanted to post my reply after Kent’s post.

Peter March 5, 2014 at 11:55 am

Guess nobody wanted to answer Marc’s question…. :)

Reply

JTM March 5, 2014 at 12:53 pm

Those who are able to pay more, should pay more. They are the ones who benefit most from our system of government.

Why should the wealthy pay a MUCH lower percentage than many in the middle class? Many wealthy pay an effective rate not much higher than the employment tax rate the rest of us pay (with income taxes on top of that!).

Why should those that benefit greatly by having a healthy, able to spend on things other than necessities, middle class, not want the middle class to be as financially able as possible? Over time, a healthy middle class can create many more jobs than a handful of wealthy people or large businesses getting a tax break.

Reply

JB March 5, 2014 at 1:05 pm

The rich already pay more. How much more is open to debate. Everyone complains about the rich person influence in DC, yet it’s not like the rich are getting the benefit of food stamps, section 8 housing or earned income credit. the wealthy pay more than the middle class. Why do think there is a top tax bracket of 39%? The middle class aren’t paying 39%.

Reply

JTM March 5, 2014 at 2:46 pm

jb – Add in the employment taxes of just over 15% and the middle class can easily pay 43%! After ~$128k/year those taxes are cut drastically.

You don’t think the wealthy benefit from aid programs? They benefit greatly. What about the many large apartment complexes that cater to them? What about all the businesses, big and small, that they make purchases from? What about the businesses that don’t pay livable wages? They benefit from the aid programs making up the difference for their workers.

Point being, things are not as black and white as you are trying to make them out to be. You know the talking points but no substance.

Reply

JB March 5, 2014 at 2:56 pm

Ok, but you just can’t take a person making 30K and magically have them make 80K no matter how much the CEO makes. It just doesn’t work like that. If you want teachers to make $200K a year, your taxes will go up and the education your kids get won’t change one bit. Large apt. complexes get money from the Federal gov’t. Your tax dollars. If it is so easy to make millions from owning a large apt complex, plenty of people would be in real estate management. It isn’t that easy and there aren’t thousand of complexes like this. the rents aren’t high, but expenses to maintain might be. Your wage is determined by your skills. WalMart cashiers will never be paid $40K a year. Neither will Taco Bell workers. There will always be low paid jobs. The 1% aren’t stopping the 99% from getting an education and learning a new skill. God knows there are hundreds of gov’t programs that ever get used to improve your skills. Bill Gates isn’t obligate to pay his AP clerk $1,000,000 a year just because he has millions.

JTM March 6, 2014 at 11:15 am

JB – You are going to unfair extremes. I don’t believe it’s easy to make millions from a large apt complex and didn’t say that, but those landlords do benefit from these programs (as do smaller landlords such as myself).

I don’t believe everyone should have income greater than their abilities. But I do believe having people able to by your products is a necessity for all to thrive. Employers have the upperhand currently in wages, but that doesn’t mean they should pay as little as possible. Also, education only goes so far, there are only so many good paying jobs and more qualified workers would reduce those wages. The low wage jobs are things that need to be done, why shouldn’t they pay a reasonable wage? And, if the employers prefer we subsidize their workers through government programs, why shouldn’t they pay taxes towards those subsidies?

JB March 6, 2014 at 11:31 am

We may not like it, but we are all slotted into a salary based on the capital markets. If you are one of the 1% of anything , you get paid the most. Actors, Athletes, Doctors, Lawyers, CEO, Salemen. If you want affordable housing, then that complex gets money from the gov’t. Not every complex is low income. These same people are most likely getting food stamps. Again, not everyone does. If you think your salary is too low, go find a job that pays more. That is the American way. Be the best taxi driver and out hustle everyone else. Build a clientele that can depend on you. If you are a janitor, your slot in life is pretty limited until you have the ability to start your own firm or have the ability to lead the other workers as management. Small business owners have zero obligation to spend X% of profits on salaries. Large corporations set budgets and they have little reason to overpay the accounting clerk for basically data entry. Computer programmers have more skills than the admin assistant answering the phone. The exec admin makes more because that person has more responsibility. The more responsibility the job has, the more you make. That is the system weather you like it or not. Jobs that are based on the taxpayer, ie Police, teachers etc, can’t be paid more without increasing taxes. Paying someone more doesn’t automatically attract better performers, but those that are in the profession should be able to be able to get bonuses based on certain metrics. It isn’t easy to measure all metrics, but I think most of us know a good teacher from a great teacher. Exxon made $40B dollars in profit, but it was only 11% of revenue. It wasn’t obscene, but if they had revenues of $100B and expenses of 60B, are they smart for being able to get the most out of who they employ? The engineers aren’t making minimum wage. you can’t just pay the unskilled $60K a year for a job anyone can do. It just doesn’t work that way. Even at $10 an hour, prices will rise and these people will be in the same boat. Salaries in other jobs will rise a bit as well. How would you like to be paid the same as a Taco Bell worker when you are working in an office with a basic college degree?

Peter March 6, 2014 at 8:17 am

This is a TOTAL MYTH – the rich do pay significantly more on a percentage basis than those in the middle class. It isn’t even close. What you are responding to is the outlying billionaire who has all of their assets in tax-free accounts and shelters and uses charitable deductions to decrease their tax burden even further. This is NOT the norm. Most of us making in the high six-figures pay close to 40% in income taxes. When I was in the middle class income range, my effective tax rate was often in the single digits or low teens.

Reply

JTM March 6, 2014 at 11:26 am

PETER – It’s obviously NOT a total myth, you admit as much yourself that there are at least outlyer cases. I may not have qualified my statement properly, as I didn’t mean all wealthy pay a low tax rate, but a significant number do. Romney’s taxes alone show it’s not just those with hidden offshore accounts that can pull this off. Tax rates on investments are much lower than what the incremental rate is for many in the middle class.

Reply

JB March 6, 2014 at 11:37 am

We can all agree that 1% of people are rich and some of them are dishonest and might be hiding money from the IRS. It isn’t the majority of the rich people so stop painting everyone with the same brush. There are a few Ponzi schemers, there are a few CEOs that bankrupted a company. It isn’t the majority, it is a very small percentage that makes people think they are all like that. Public companies have a very difficult time hiding money or doing things illegally. Have companies committed fraud? Sure, but not many. Enron is the last major company and that has been over 10 years now. Private companies have more flexibility, but they won’t last long under intense scrutiny of a forensic audit.

JTM March 6, 2014 at 11:59 am

JB – It’s also a very small percentage of the lower classes that do the same. There are people at all levels that good and work hard and plenty at each level that lie, cheat, scheme and steal. I have nothing against the wealthy and know that most of them worked hard to get there. What many people don’t get, is that many of the poor also work very hard and for one reason or another stay poor. Yes, it may be bad choices, but there are many other factors.

We are all in this together. It’s not R vs D, conservative vs liberal, rich vs poor, …

Ken February 20, 2014 at 7:25 am

marc — I find it very interesting that the people who pay the least in federal taxes both in percentage terms, and in terms of actual dollars contributed, are the ones who complain the loudest about how unfair the system is. These are also the same people who benefit the most when you look at what they receive in federal government benefits, versus what they have contributed to the system.

You would think that the people who are paying the most and benefiting the least, i.e. the high earners, who would be the ones to complain. But it’s exactly the opposite. It’s people who pay the least and who benefit the most who are complaining the loudest.

I just find that very interesting.

Reply

JB February 20, 2014 at 11:29 am

My issue is the total waste and fraud that goes on in the gov’t. If the gov’t was more efficient I wouldn’t have as much of an issue. Hundreds of billions of dollars are wasted each year. Many Federal Programs could be done on a more local level. We don’t need a Federal Education program. Let the states deal with it.

Reply

JTM March 5, 2014 at 12:58 pm

JB – Those points are valid, but they mostly focus on issues that effect the lower classes. What about the total waste and fraud that happens through loopholes, fraud, and government giveaways to the wealthy and corporations who have the ability to pay for “creative” accounts and lobbyists?

Reply

JB March 5, 2014 at 1:10 pm

So companies that are paying accountants and lobbyists are job creators. What happens when all taxes are fair? Those jobs go away. If you have a company and you can hire someone and pay them $100,000 to save you a potential $1,000,000, wouldn’t you do that? There aren’t illegal loopholes. If the IRS wants to fix the loopholes, then they can. Yes, they write the code to appease tons of different industries. Hate the IRS, not the companies that go by the code and use it to their advantage.

Reply

JTM March 5, 2014 at 2:38 pm

JB – You mentioned fraud in your first post. What about the those corporations and wealthy that defraud the government? One large fraudster makes up for many of the socalled welfare queens. People at all levels of wealth go to extreme means to keep money in their hands.

As for the IRS, I would like the tax code junked and the money wasted on finding/exploiting loopholes could be better spent making better products or given to shareholders.

JB March 5, 2014 at 3:00 pm

how many wealthy go out and actually defraud the gov’t? Plenty of middle class defraud the gov’t as well. Plenty of small business owners declare expenses fraudulently. Name some companies instead of painting them all with some broad brush. CEOs are held responsible for fraudulent books. That is why they have outside auditors. You think every company and rich guy is screwing the gov’t. That is your issue, not mine.

JTM March 5, 2014 at 3:31 pm

JB – I couldn’t agree more, there are plenty of people cheating the government, regardless of wealth. I’m no more painting with a broad stroke than you are. Which goes back to my original point that it’s not just the poor or lower middle class defrauding the government and causing problems.

I don’t think every wealthy person or corporation is cheating the government, but there are plenty who do, just like the not so wealthy. But, when the wealthy do defraud, they do it for much larger amounts. The biggest bankruptcies in history are companies that defrauded the government and all of us.

JB March 5, 2014 at 4:27 pm

Bankruptcy and Fraud are two different things.

JTM March 5, 2014 at 4:56 pm

JB – Agreed, very much that bankruptcy and fraud are different things. If you re-read, I never said fraud = bankruptcy. HUGE fraud led to largest bankruptcies in history. That doesn’t even cover the Ponzi-schemers such Madoff that blatantly took from anyone who would give them money (from many levels of wealth and charities), all while being “watched” by the investment banks that profited from them.

PJA March 5, 2014 at 5:45 pm

JTM is pointing to fraud that, when discovered, leads to the bankruptcy of large institutions. So, yes, bankruptcy and fraud are different, but these can be connected in terms of causation. And yes, large companies do far more damage than the “welfare queens.”

Specific examples of companies that JB requested range from procurement fraud by defense/military contractors to big pharma to Medicare/Medicaid billing fraud — all referred to as false claims usually for services not rendered to the government. In 2012 alone, the Dept of Justice recovered nearly $5 billion in fraudulently claimed billings. In recent years, major settlements and fines against large companies committing fraud against the government have been

Johnson & Johnson, $1.273 billion
United Technologies Corp. (UTC), $664 million
GlaxoSmithKline, $750 million
Allergan, $600 million
AstraZeneca, $520 million
Novartis Pharmaceuticals, $422.5 million

… the list goes on …

Peter March 6, 2014 at 8:19 am

I don’t think any of us on here are “pro-fraud”, whether it be taking advantage of entitlement programs or abuse of “loopholes” by the wealthy.

Rebecca March 2, 2014 at 6:05 am

Very astute observation! I was trying to put my finger on
just that thought, and you nailed it. Why is it that those
who are the target of class-envy don’t seem to grasp
that it is envy and greed that drives this whole discussion
and just continue to discuss the details of tax law
as though it was some academic study?

Reply

dennis March 24, 2014 at 8:43 am

I complain a lot. By most measures, I am one who earns a lot (wife and I earn $200k/year ) and we pay a lot in taxes (a bit over $50k plus state taxes and local taxes my employers share of FICA so closer to $78k). But wealthy, by no means. I believe higher earners should pay higher tax rates, not just higher taxes.

I do not understand why anyone who earns more and has the benefit of living in the USA where he is safe, lives in a very nice place, especially when compared to over 90% of the worlds population and is surrounded by a populace that is educated, civil and tolerant, should complain at paying higher taxes.

On the flip side, why should some one who is struggling to pay for food, shelter, etc. pay much at all?

I am a pretty smart guy with a Ph.D. who works hard for my success, but I have many relatives who work no less hard than I do, but simply do not have the talents I do and cannot command anything close to the same salary. I am lucky, I benefit from a well-developed economy that values my contributions (if I were say, a ditch-digger with no other talent, I would not be the best ditch-digger, nor one who made a lot of money compared to other ditch-diggers, I would still work hard, but I would have a lot less money). I do not think you can blame that much of the wealth disparity on “work ethic”, despite what is said by politicians in an effort to justify the present tax system.

Everyone fortunate enough to live in the USA is lucky, none more so than those who make much more money than average. They should pay taxes at a higher real rate for the privilege of getting to enjoy that good fortune. Anyone earning double should pay more than double in taxes (ie a higher rate, which is not now the case in fact.) I say this despite being in the not-so-sweet spot of paying payroll taxes on nearly all my income and being in the salary range too low to be rich and too high to be poor so wife and I pay at higher rate than either really rich or poor.

Reply

Jack Daniels April 1, 2014 at 3:39 pm

So by that argument, you should not complain if we raise your taxes- say..by another 20%? 30%? 50%? After all, you have the privilege of living in the USA! And by golly, it’s this government that you owe everything to! Not YOUR hard work. Not your sacrifices. It’s the government! The government did all of this for you!

Your argument reeks.

Reply

Julie April 12, 2014 at 8:14 pm

Yes. Your government is the reason you dont need to bribe a mobster to not do harm to your business. Your government is the reason you dont need to grease a bunch of corrupt government employees to not forge fictious charges against you or your business. Your government does a lot to manage the economy, police your customers, prevent corruption, and a variety of other crimes as well as set and moderate many of the terms of our free market system.

Think its all about your hard work, great! Go make $400K in lawless or corrupt places like Pakistan, Russia or heck, stay close to home and try it in Mexico. I hear the taxes are much lower. Good luck! Dont get shot.

Reply

Charlie February 24, 2014 at 6:13 pm

I make over $400K. I pay lots of taxes and don’t feel rich. Except that I’ve had the same job for 25+ yrs and only have to work 32 wks a year for it.
Am I a bad person?

Reply

Man-of-Reason February 25, 2014 at 3:08 pm

The only people who claim that you are a “victim” Charlie, are those who want to cut government services and safety nets with the intent of cutting taxes for the poor ol’ wealthy “victims” (aka, themselves). It’s a ploy, along with their claim of “class warfare” to enlist your support by putting you on the defensive. No one believes you’re a bad person for being in the 1% and lawfully avoiding taxes. The only argument here is whether the progressive (or regressive) tax codes are fair to all.

Reply

Peter March 5, 2014 at 11:49 am

Again…. We have progressive taxes already. What I think you mean is that “The only argument here is whether the current progressive tax system is fair enough to all”. Correct?

I’m still not sure why more people don’t realize that the problem lies in the spending portion of our budget. Just take a peek at Obama’s proposed budget he just released last week. Just swiping the public credit card over and over and over and over…..

Reply

JTM March 5, 2014 at 4:15 pm

Peter – That’s the nail on the head right there. The money has been spent, the government needs to somehow get the money to pay for it.

We can’t “starve the beast”, trickle-down theory doesn’t work, the deficit is too high to grow out of it, inflating our way out would be very painful, and we can’t spend our way out of it either!

BOTH parties have put us where we are. They all have their special interests they want to protect, so they give a little to another’s pet project to get some for theirs and in the end everyone is getting something and our debt grows.

No one has the fortitude to do what is needed, cut defense, cut entitlements, cut special tax breaks, etc.

We need to take a true, stark look at where the money is going and how we can cut back while doing the least amount of harm to the country, while also considering raising taxes on some/most to cover our expenses. We need to leave no stone unturned, a little here and a little there will make all the difference in the world without harming any one group too much.

Reply

Peter March 6, 2014 at 8:21 am

AMEN JTM. Everybody wants to be a popular politician. The minute we propose cutting the military, the opposing politician sees an opportunity and starts telling us how we won’t be safe anymore (see: McCain). The minute we want to cut education funding, the opposition sees an opportunity and says that we don’t care about our schools (see: Obama). The point is that EVERYTHING needs to be cut.

Funny thing is I work in the DC area and most Federal employees would even agree with this – to their own deteriment.

protophysics19 February 27, 2014 at 2:19 pm

Can anyone answer this question? What gives this small group of individuals i.e the state the right to involuntarily take money and resources that they didn’t earn through voluntary interactions upon threats of imprisonment?

Reply

Lance February 28, 2014 at 4:05 pm

Without a progressive graduated income tax, capitalism would fail as depressions would get increasingly worse.

“..Depressions occur after investment bubbles burst. In free-market capitalism, capital generates income for the owners of the capital which in turn is used to create additional capital. This is very good. Sometimes, it can be actually too good. As capital continues to accumulate, its owners find it more and more difficult to deploy it efficiently. The business sector generally must interact with the household sector by selling goods and services or lending to them. When capital accumulates too rapidly, the productive capacity of the business sector can outpace the ability of the household sector to absorb the increasing production.

The capitalists, or if you prefer, job creators use their increasing wealth and income to reinvest, thus increasing the productive capacity of the business they own. They also lend their accumulated wealth to other businesses as well as other entities after they have exhausted opportunities within the business they own. As they seek to deploy ever more capital, excess factories, housing and shopping centers are built and more and more dubious loans are made. This is overinvestment. As one banker described the events leading up to 2008 – First the banks lent all they could to those who could pay them back and then they started to lend to those could not pay them back. As cash poured into banks in ever increasing amounts, caution was thrown to the wind. For a while consumers can use credit to buy more goods and services than their incomes can sustain. Ultimately, the overinvestment results in a financial crisis that causes unemployment, reductions in factory utilization and bankruptcies all of which reduce the value of investments.

If the economy was suffering from accumulated chronic underinvestment, shifting income from the non-rich to the rich would make sense. Underinvestment would mean there was a shortage of shopping centers, hotels, housing and factories were operating at 100% of capacity but still not able to produce as many cars and other goods as people needed. It might not seem fair, but the quickest way to build up capital is to take income away from the middle class who have a high propensity to consume and give to the rich who have a propensity to save (and invest). Except for periods in the 1950s and 1960s and possibly the 1990s when tax rates on the rich just happened to be high enough to prevent overinvestment, the economy has generally suffered from periodic overinvestment cycles.

It is not just a coincidence that tax cuts for the rich have preceded both the 1929 and 2007 depressions. The Revenue acts of 1926 and 1928 worked exactly as the Republican Congresses that pushed them through promised. The dramatic reductions in taxes on the upper income brackets and estates of the wealthy did indeed result in increased savings and investment. However, overinvestment (by 1929 there were over 600 automobile manufacturing companies in the USA) caused the depression that made the rich, and most everyone else, ultimately much poorer.

Since 1969 there has been a tremendous shift in the tax burdens away from the rich and onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers.

In an interview about the proposed “Buffett Rule”, T.J. Rogers the CEO of Cypress Semiconductor Corporation (CY) inadvertently illustrated the potential perils of overinvestment for an economy. Warren Buffett the CEO of Berkshire Hathaway Inc. (BRK.A) (BRK.B) had proposed the “Buffett Rule” which would impose a minimum tax of 30% on incomes above one million dollars. Rogers explained to Larry Kudlow on CNBC’s Kudlow Report on May 16, 2012, why he opposed the Buffett Rule. Rogers said that he spends less than 1% of his income on his living expenses and invests the other 99% in creating new businesses and increasing the productive capacity of the businesses he already owns. If he had to pay taxes pursuant to the Buffett Rule he would not be able to invest as much. Clearly, someone who invests 99% of their income will see his wealth grow exponentially as long as his investments are at all productive. It would not take too many members of the top 1% investing 99% of their income before they would be unable to deploy their capital productively. This would be a classic example of capital accumulating faster than consumers’ incomes. Consumers would not be able to buy all the goods and services produced by the over investment…”
http://seekingalpha.com/article/1543642

Reply

Rebecca March 2, 2014 at 10:13 pm

I disagree that abundance produces depressions.
There’s no way to prove this thesis. It’s purely
conjecture that sounds like it was dreamed up
by a marxist professor at some college I am
paying for with my taxes, but who has never
had a real life job. I have seen much evidence over
my lifetime, though, that governments cause
misery in countries. The latest example is the
dictator thrown out by Ukraine, who had
accumulated to himself all sorts of decadent
luxury his people could not dream of. Govt
is the only entity that can extract from everybody
forcibly, and which, in America has been used
to drive many people out of business. Govt
policy in OR has just closed another lumber
mill with a loss of 85 jobs at the lumber mill
and then all the jobs that supported the mill.
We are not being allowed to use our resources.
Whole sectors of industry have been closed,
Businesses from other countries have gotten
tax breaks for a period, then move away when
the introduction period is over. Our own people
are not given tax breaks–except Nike, which
said it was going to move away–so the governor
called a special session and they granted a
waiver to the tax. In doing this, the Democrats
have retained a very large business and their
favorite leftist businessman, but driven
many, many smaller businesses out of business
with their policies–especially targeting conservatives.
There is increasingly a bubble forming, but I
really doubt that it is for the reason stated above,
which is not able to be proven.
I do know that before we went down this road
of mammoth govt expansion America had a
large and growing middle class, lots of business
activity, and we were making the rest of the world
rich along with us. Now we are getting ready to
collapse the world with our banana-republic
printing of money and other manipulations
by the govt and the people they are in collusion
with.

Reply

JB March 3, 2014 at 7:11 am

You can produce 25M Iphones, If only 1M people buy them, you haven’t really created anything. Having the capacity to ramp up production based on demand without having to get loans or bank approval is a good reason to keep liquid capital on hand.

Reply

Peter March 5, 2014 at 11:54 am

I just had to interject here once again….. There is actually an economic definition of “depression” – and the 2008-2009 downturn (not sure why you quote 2007) did NOT qualify under any of the metrics that one would use. To compare it to 1929 is just silly. There are really very few parallels between the two – both statistically and anecdotally – and the regulatory mechanisms to protect the people dwarf those in 1929. In fact, most of them were created after the Great Depression.

Throwing the word “depression” around is fun for politics and stirs up emotion – but it just isn’t accurate.

(Just for a point of reference….I do work in this field. Not blindly quoting Wikipedia or third party political slanted articles.)

Reply

JB March 5, 2014 at 12:05 pm

Thank you for the sane comment. I hate the over hyperbole of depressions and people acting like our economy will turn into Argentina or Zimbabwe.

Reply

JTM March 5, 2014 at 1:02 pm

proto – Our government was not formed on the idea of no taxation, it was founded on the idea of no taxation without representation. How do you expect our country to continue to exist without taxation of some sort? That would mean not just loss of social safetynets, but also loss of military.

Reply

Man-of-Reason February 27, 2014 at 4:50 pm

That’s why they call it “tax” Proto. If you gave it voluntarily, it would be called “Charity”. Oh, and that small group of people you talk about includes every citizen so governed. That’s why they call it “self rule” aka “democracy”.

Reply

Man-of-Reason February 28, 2014 at 6:29 am

Awhile back, I mentioned that in the state of Washington, where there is no state income tax, the bottom fifth of income earners pay on average 17.8% of their meager incomes to state and local taxes. The top 1% pays less than 3%. That’s called “regressive taxation”, and was neither envisioned by the founding fathers, nor believed fair by the vast majority of Americans. But money buys influence, and all governments drift in the direction of giving advantage to those who are most influential, the most wealthy. That requires periodic adjustments and the establishment of the progressive income tax was one such adjustment. Without the income tax, (or with a “flat tax”) the overall tax burden would fall most heavily on the poor and middle class while the wealthy would accumulate a greater and greater portion of capital and influence, much like a game of Monopoly where the winner ends up with everything while everyone else loses everything. Is that really what you want?

Do some politicians pander to their constituents by bringing home the largess from Washington D.C. to spread among the home folks? You bet. Most all do to some extent. That’s not corrupt unless it rises to the level of “tyranny of the majority”, and then we have checks and balances through the court system to protect against that. What is corrupt is the injection of unlimited amounts of money into our political system, especially when done without revealing the source. Free speech? Hardly! Such money merely drowns out the voices and influence of the average citizen, making him irrelevant in “self government”, also known as democracy. It kills democracy.

Money buys propaganda. And we know that Madison Avenue can sell just about anything with money. They play upon our emotions rather than our God given ability to reason in order to sell products or candidates. They convince many to side against their own best interests by using fear and hate rather than reasoned civil discourse in an effort to decide our course of action. They use words like Socialism, Communism, Ponzi schemes, Marxism, Godless, death tax, redistribution of wealth, and on and on. These words are meant to evoke fear and anger and when you’re angry, your ability to reason diminishes and your frontal lobe shrivels to the point where you will gladly screw over yourself and those you love, blinded by your emotions. That’s exactly what they are counting on. You see Rebecca, they are the one percent, and the only way they can advance their continued accumulation of wealth at your expense is to convince you that to do otherwise is immoral, a sin. Obviously, it works.

Reply

JB March 5, 2014 at 12:04 pm

Texas, Florida, Nevada and Wyoming dont’ have a state income tax as well. While our property taxes are higher, I am OK with that because you CHOOSE what type of dwelling to live in. I want my income as high as possible without it being taxed by a state.

Reply

dennis March 24, 2014 at 8:54 am

Of course you have to live somewhere and even if you rent, the property taxes must get paid. That represents a regressive tax. This can be made worse by property owners who do little to minimize property taxes since any increase is just passed on the the renters (up to the point of inability to pay, at which point the state will come in and help the owner evict the renter for non-payment.)

Property taxes and sales tax are regressive taxes, period. That might not have been the original intention of such taxes, but is, in effect, exactly how they are best described.

Reply

Rebecca March 2, 2014 at 6:11 am

Where is my answer to man of reason? I know it
was read because he asked about Jessica. Not
allowing my answers to post is censorship. I have
posted other answers to man of reason which
have not posted either. Definitions I have
provided to the words objected to, are relevant
to the discussion on this thread. You claim to
value fairness, but if you remove valid communications
that add to the discussion after man of reason
attacks me, then you are not fair in your censorship.

Reply

Man-of-Reason March 2, 2014 at 7:59 am

I’m sorry your post was deleted because my response to it would certainly make more sense were it still there. But I do understand that Moneyning is allowing only those posts which address the issue of who are the people who will be affected by the tax increase on incomes over $400,000 and why that increase is either justified or not. It’s actually been a great discussion because it hasn’t been allowed to go off on silly tangents. For example, I did read about Rebecca and the heartbreak her parents feel about losing custody to the hospital, but that has nothing to do with tax increases and the economy, nor about partisan propaganda distorting facts which affects the way we support such measures.

I’m sure that if you address the subject, your posts will remain.

Reply

Mancrunch March 2, 2014 at 1:57 pm

I think MOR meant Jessica, not Rebecca.

Reply

Rebecca March 2, 2014 at 6:24 am

So, am I to understand that I can be attacked
by man of reason for using words he objects to
in a public venue, but then I cannot reply to
his attack? I cannot refute the obvious bias
about ideas that he states over and over
and which are untrue? Your censorship of
ideas that are relevant to who earns more
than a certain amount, should apply to his
attacks on me, not just to me. Please get him
to stop attacking my analysis of this whole
discussion if you are going to censor me.
You are not playing fair with the censorship.
But that is my whole point. The ideology of
communism has always hated Christ Jesus
and the liberty of those who benefit from the
labor of their own hands, and those who
choose to labor with them. While mouthing
“fairness” as the goal, there is no tolerance
for any other viewpoint.

Reply

marc March 3, 2014 at 9:32 am

It has been posted on here multiple times.
If the top 3% of the tax payers pay 50% of the taxes, that is a progressive tax system. I think it is actually unclear why it’s “fair” to have a progressive tax system, but that is what I was taught as an econ major. Others, like Ronald Reagan clearly advocated that people make the best choices of what to spend not the government. It is clearly not the answer to tax the rich more to solve our spending and economic problems. That much is clear.
Recently a study came out that the top 86 people in the world control more wealth than the bottom 50% of the world. It certainly was an eye grabber and many prominent people believed that something is wrong with that picture. But is it?
Most of these super wealthy have done transformational things in this world. Does anyone think that Bill Gates didnt add $100 billion in efficiency to the world. Warren Buffett employs millions of people at his companies. And, in the end, they will give most of their money to charity or it will go to the government in inheritance taxes. And the Gates Foundation is focusing on the poorest people in Africa and working to eliminate malaria. So what is the rub here? There are more recent billionaires like Zuckerman. Has Facebook changed the world as much as Microsoft, probably not. In the end Zuckerman will probably give most of his wealth away too, and he will pay billions in taxes. It is too soon to tell as Facebook only recently went public and most of his enormous net worth is tied up in Facebook stock. He probably wants to and needs to keep his investment in the company.
I’m sorry, but I just don’t buy the anti-rich let’s tax sentiment.

Reply

JB March 3, 2014 at 9:53 am

This might be a technically, but Buffet owns stakes in other companies. He has no hiring/firing capability. He doesn’t control the companies. BH is basically an S&P index fund. Facebook has made social networking a big thing. Will it be around forever? Probably not, but neither were horse and buggies. VCRs were big once and so were 8 Track tapes. Nothing lasts forever. Bill Gates had a bigger impact than Warren Buffett.

Reply

Aspiekid March 3, 2014 at 11:11 am

Bill Gates was a very smart guy but was originally a greedy predator who happened to be in the right place at the right time. He found out that IBM was looking for an operating system for its new personal computer to compete with Apple. He also happened to know some genius who invented an operating system, but didn’t know anyone was looking for one. So, instead of cluing the guy in, Bill bought the OS for $50,000, called it PC DOS and sold it to IBM for hundreds of millions. As luck would have it, IBM never required exclusive use in the sale, so our friend Bill changed his copy’s name to MS DOS and collected billions from the sale of clones.

As he built MicroSoft, his advantage in capital meant he cold take software developed elsewhere away from those companies by hook or crook. He was great at figuring out ways to steal other peoples’ ideas and marketing efforts. Netscape was a great example. He was not a nice guy, and all of this development would have happened anyway regardless of Bill Gates.

When court battles started going bad and he was exposed for the turd he was, he hired a PR firm who told him that he needed to get into charity. He’s there in a big way now and has revived his image big time thanks also to his wife. I do believe he’s change in real ways also.Like many great fortunes however, it started with very unseemly behavior and a whole lot of luck.

Reply

Lance March 3, 2014 at 10:22 am

Having the richest 3% pay 75% of Federal taxes and the bottom 97% pay only 25% during the 1950s, 60s and 70s allowed the economy to hum along nicely without any severe recessions or depressions. When the rich used their political power to shift the tax burden to the middle class, they robbed the middle class of much of their purchasing power and caused the severe recession that began in 2007. It is not a matter of fairness but rather efficiency to have a progressive income tax and tax all income rather the mostly just wages. BTW this is a world-wide phenomenon.

“…The enormous shift in tax policy favoring the rich has been a world-wide phenomena going on for many years. After the Socialist party candidate François Hollande won the presidential election, France enacted tax laws that gave France the most progressive tax system among the 20 largest industrial nations. However, the tax systems have become so much less progressive in the past decades, that if the tax code that France has today were applied to France in 1969, France would have had the most regressive tax system among the 20 countries in 1969.

A major component of the shift of the tax burden from the rich onto the middle class involves the corporate income tax , whose incidence falls entirely on the owners of corporations. These were 4% of GDP in 1969 and are now less than 1%. ..”
http://seekingalpha.com/article/1543642

Reply

Aspiekid March 3, 2014 at 11:19 am

“If the top 3% of the tax payers pay 50% of the taxes, that is a progressive tax system.”

Not if the top 3% have 75% of the income. Do the math.

Reply

JB March 3, 2014 at 11:30 am

Who cares who has the income. It’s about paying taxes. Poor people have the same access to a basic education as the rest of us. Dell and Gates never finished college. You don’t need college to come up with an idea the rest of the world is willing to pay for. The rich will always be rich and will be able to spend less in order to pay the increase in taxes. Why should the rich pay 75% of the taxes? When is it too much? The rich use the least in gov’t services the poor use.

Reply

Aspiekid March 3, 2014 at 11:41 am

Jefferson thought the rich should pay ALL of the taxes (then called tariffs). Even Adam Smith, who wrote the book on Capitalism, believed in progressive taxation with the rich paying a greater proportion of their incomes than the middle class. It’s simply the way Americans have overwhelmingly believed fair.

“The rich alone use imported articles, and on these alone the whole taxes of the General Government are levied… Our revenues liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings.” –Thomas Jefferson to Thaddeus Kosciusko, 1811.

Reply

Joseph Vance March 5, 2014 at 4:31 am

Wrong. Top 1@ pay 33% of all taxes and the top 5% pay pay 75% of all taxes. Yet all the WHINING comes from the jealous losers who think it all should be handed to them.

Reply

Mancrunch March 5, 2014 at 5:20 am

You missed the point entirely. Lance didn’t say what percentage the top 1% now pay. He’s simply making the point that having a progressive tax system where the top marginal rate for the wealthy is much higher than today, doesn’t depress the economy. As verification, he points to the economies of the 50s, 60s and 70s.

Since you don’t have the capacity to understand why most Americans have advocated a progressive tax system throughout history, you attribute their motives to being “jealous losers”. Then you also must lump into that category the author of our Constitution, Madison; author of the Declaration of Independence, Jefferson; author of the first publication on capitalism, Adam Smith; along with most other great Americans including Lincoln and Teddy Roosevelt. That’s right Joe. They all believed the wealthy should progressively pay a greater portion of their incomes in taxes.

Reply

Lance March 5, 2014 at 6:33 am

By making the tax rates on the income that the rich receive such as dividends, carried interest, capital gains and inheritances much lower than the tax rate on wages by the use of their political power and ownership of the media, the rich have gravely weakened the free-market capitalism that provides the prosperity, since the concentration of wealth vastly exaggerates the business cycle

“..Since 1969 there has been a tremendous shift in the tax burdens away from the rich and onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers..”
http://seekingalpha.com/article/1543642

Reply

JB March 3, 2014 at 10:30 am

I am all for the ACTIONS of a rich person who
uses their wealth to oppress people…. how does a rich person oppress someone?

Reply

Aspiekid March 3, 2014 at 11:16 am

Example: Scrooge and Bob Cratchit.

Reply

JB March 3, 2014 at 11:28 am

Scrooge was just a miser.

Reply

Aspiekid March 3, 2014 at 11:30 am

I thought he was a rich miser. No?

Reply

JB March 3, 2014 at 11:51 am

Rich is relative. He had money from being a money lender and I would think being a miser he wouldn’t have had the largest house in town, but since he loaned money, he was better off than his customers. Cratchit could have found work somewhere else. He wasn’t a slave. He could have went somewhere else. Working for the County, I see some people that think job security is more important that maximizing their skills and salary. Many could have gone and worked in the private sector, maybe making more money ,but they are tied to the idea their pension will be a miracle be all end all when they retire. If you could have found a job making $10K more per year, that is more than the pension would be paying. Maybe Cratchit just put up with Scrooge, but it sounds like he could have worked at the bank.

Aspiekid March 3, 2014 at 12:25 pm

As I recall, Tiny Tim had a pre-existing condition so Bob Cratchit was tied to Scrooges medical insurance plan, meager as it was. Scrooge knew that and took advantage, not giving poor Bob a raise in more than a decade. Now,. with ObamaCare, Bob will be free to explore his talents as CFO with another employer, or have leverage to ask Scrooge for a generous raise. Bless you one and all!

Rebecca March 3, 2014 at 10:35 am

Here is my post resubmitted with correction:

Anti-rich rhetoric only half-describes the problem/answer
scenario. I am against the ACTIONS of a rich person who
uses their wealth to oppress people. I am all FOR the
actions of rich people who use their wealth in constructive
ways. It’s all a matter of the condition of the heart.
Mankind is not naturally kind to others. It’s only through
a transformed heart, that a person becomes burdened to
intervene in the world out of a heart of sacrificial love.
I watched my father and mother help to build up a Congolese
community through their love of the people God loves in
the area of Africa they went to serve as medical missionaries.
I have also observed people with power in that same area
who spent their lives and power destroying people around
them. My father’s Congolese sister (orphaned while my
grandparents were missionaries) was attacked by her
biological uncle and the missionaries saved her life and flew
her to safety. Her uncle used his power to gratify his own
selfish pleasure with no concern about her. The tribal
governmental structure would have totally backed his
actions, it was people who had been taught to love others
by the author of love, who stepped forward to save her.
The same applies on a large scale with the individual actions
of people who use their power, wealth and influence to either
work evil or good.
Where would new wings in hospitals be without the wealthy?
They might have to be coerced to do the action, by having
a plaque in their honor posted on the wall of the hospital, but
the fact is that the hospital wouldn’t exist without the wealthy.
Some wealthy people share their wealth because they want to
help the community. We must look at individual actions.

Reply

Aspiekid March 4, 2014 at 2:40 pm

We all recognize the good some do with their charity. Giving is what your Jesus taught his followers to do. However, because some very wealthy people donate hospital wings with their names on the outside in large letters, doesn’t mean they shouldn’t have the heaviest tax burden also (or that they’re believers). Your Jesus cited the widow who donated the mite (a meager pittance) as giving the greatest amount because that was all she had, but today, very few would consider engraving her name on a plaque. You seem to have lost that value, as many here declare that the widow’s contribution is so much less that the $300K the millionaire pays in taxes.

There is no “class warfare”, at least originating from the poor or middle class. That’s SOP for those who want to screw over others, deflecting their actions by first accusing their victims of the same offense they are perpetrating before they can be accused. It masks their actions by creating public confusion as to who is the victim and who is the perpetrator. But I was always taught to “follow the money”.

Even though the wealthy (although certainly not all) and their surrogates now claim to be the victims of class warfare, is that really true? Were it true, then the lower and middle classes would have to be substantially better off now and have made greater gains over the past few decades than the top 1%. But the FACT is that, while the American worker is 95% more efficient than he was in 1980, his pay has increased only 8%, with the very poor being even worse off. The difference went into the pockets of the 1%, those who claim to be “victims”. Therefore, if there has been class warfare. it’s been perpetrated by the 1% on the middle class and poor.

The wealthy not only had the power, wealth and influence to gain at the expense of all others, but they’ve been given even more by the Supreme Court and can now make unlimited contributions anonymously to political causes and candidates in order to legislate greater advantages of power, wealth and influence at the expense of everyone else.

Your Jesus dined with the poor, the sinners, and the disabled; those who would be today’s welfare recipients, and he was opposed by the establishment, especially the well-to-do and well connected of the age who finally crucified him. His ministry was to those who you now vilify and he opposed those who you now hold as heroic. Unfortunately, your vision of “individual actions”, with which you judge others, is greatly clouded by propaganda purchased by wealthy donors and PR firms, none of which represents those to whom your Jesus ministered. Jesus doesn’t want us to be “successful”, he wants us to be useful to others according to the talents we’ve been given.

(Note: Moneyning, Please retain for Rebecca’s benefit. It’s really not off the subject even though it’s addressing her belief system.)

Reply

GoodtoGo March 3, 2014 at 11:59 am

How on earth did this turn into a philosophical debate about wealth? We are in Capitalist America. Get over it already! The opportunity is there for YOU if YOU WORK HARD FOR IT!

Most C-suite executives in the Fortune 500 are earning over $400K – not just the CEO.
Most of the seasoned Wall Street professionals are also earning over $400K.
The leaders of the CWA, Teamsters and some of the other larger unions are earning over $400K.

Sources: Google or any other browser…

Reply

Aspiekid March 3, 2014 at 2:38 pm

Bill Maher weighs in on exactly what we’ve been discussing here about the persecuted 1% (actually the uberrich .01%) Very entertaining and expresses the issue quite well. Watch to the end and have fun.

http://www.youtube.com/watch?v=pcKMd49wDRk

Reply

Curto March 4, 2014 at 5:05 am

Tax rates for everybody should be 2x CPI growth. FEDERAL taxes are dollars destroyed to mitigate monetary inflation. It’s all accounting.
The US Government, a monetary sovereign, has no need for revenue. The politicians and bankers who benefit from a guaranteed interest stream will tell you otherwise.

Reply

Lance March 4, 2014 at 4:21 pm

“..Most investors now believe three things about the Federal Reserve, money and interest rates. They think that the Federal Reserve is artificially depressing rates below what would be a “normal” level. They believe that in the process of doing so the FED has enormously increased the supply of money and they believe that the USA is on a fiat money system.
All three of those beliefs are incorrect. One benchmark rate that he Federal Reserve has absolute control of is the rate paid on reserves deposited at the FED. That rate is now 25 basis points, after being zero since the inception of the FED in 1913 until recently. If the FED had left that rate at zero, t-bill rates would now be even lower than they are now. The shortest t-bills rates would now probably be negative.

Paying interest on reserves combined with the subsidy to the banks of providing free unlimited deposit insurance on non-interest bearing demand deposits is keeping t-bill rates positive. Absent those policies the rate on t-bills would be actually negative. The Chinese and others all over the world are willing to pay anything for the safety of depositing funds in the USA. Already, Bank of New York Mellon Corp. has imposed a 0.13% charge on large deposits.

An investor who believes that interest rates are headed up may respond that the rate paid on reserves is a special case, but that the vast increase in the money supply resulting from the quantitative easing must result in higher rates when the Federal Reserve reverses its course. The problem with that view is that the true effective money supply is still far below its 2007 level.
Money is what can be used to buy things. Historically money has first been specie (gold and silver coins), then fiat money which is paper currency and checking accounts (M1) and more recently credit money. The credit money supply is what in aggregate can be bought on credit. Two hundred years ago your ability to take your friends out to dinner depended on whether or not you had enough coins (specie) in your pocket. One hundred years ago it depended on the quantity of currency in your pocket and possibly the balance in your checking account if the restaurant would take checks.

Today it is mostly your credit card that allows you to spend. We no longer have a fiat money system. Today we have a credit money system. Just because there is still some fiat money does not negate the fact that we are on a credit money system. When we were on a basically fiat money system there was still a small amount of specie in circulation. Even today a five cent piece contains about 5 cents worth of metal, but no one would claim we are still on a specie money system.

Fiat money is easy to measure; M1 was $1.376 trillion in 2007 and was $2.535 trillion in May 2013. The effective money supply is the sum of fiat money and credit money. Credit money cannot be precisely measured. However, When the person in California whose occupation was strawberry picker and who had made $14,000 in his best year was able to get a mortgage of $740,000 with no money down and private equity could buy a company like Clear Channel in a $20 billion leveraged buyout, also with essentially no money down, the credit money supply was clearly much higher than today. A reasonable ballpark estimate of the credit money supply is that it was $70 trillion in 2007 compared to $50 trillion today.

The effective money supply is the sum of the traditional fiat money aggregates plus the credit money supply. Thus, despite the claims of Ron Paul and Rick Perry to the contrary, the effective or true money supply has fallen drastically over the last few years..”.
http://seekingalpha.com/article/1514632

Reply

JB March 5, 2014 at 12:01 pm

My credit card doesn’ ALLOW me to spend, my income does. I could do just fine not using a credit card. Credit cards are the reason people have done into debt. People somehow managed to spend less back in the 60′s and 70′s without plastic.

Reply

orange rhino March 4, 2014 at 1:19 pm

Why do we tolerate billionaires? Why do we let people inherit hundreds of millions of dollars? They are a greater threat to democracy than plastic surgeons could ever be. The estate tax should be 100% on inheritances above the $10 million mark. Know anybody in that group? Neither do 99.9 % of the American people. We have got to fight aristocracy.

Reply

Joseph Vance March 5, 2014 at 4:28 am

LOL, you are one sick and JEALOUS dude. Get a grip, loser and stop whining over what others have.

Reply

JB March 5, 2014 at 12:00 pm

I hope you meant to use a sarcasm font. I guess you would rather just restrict what someone can make in their life. I would peg you as a $40K a year type person. Sorry, anything you do to make your company better doesn’t matter. Your skills are worth X forever. We should embrace billionaires and anyone that takes a risk in order to improve some method. Do you really hate the person that invented the car? Do you hate the person that improved the car? How about airplanes? Do you hate the Wright Brothers for showing us how to fly? I mean, they didn’t become billionaires, but Mr. Boeing probably did. Why the hate? Embrace the rich and hope they share their wealth. If they don’t, you weren’t going to get any of it anyway. BTW, the next time you walk into a Library, you can thank that Evil Billionaire Mr. Andrew Carnegie.

Reply

Joseph Vance March 5, 2014 at 4:26 am

“Thankfully, even though individuals in this bracket are few and far between,…”

WTH!! Can someone tell me WHY we should be thankful people who earn this sort of money are “few and far between”?

Jealousy is a sickness and this statement reeks of the green monster. The attitude of “If I can’t have it then no one else should have it” is really REALLY disgusting and the position of a first class loser.

Reply

Mancrunch March 5, 2014 at 5:31 am

Franklin and Madison both warned us of what the over accumulation of great wealth by individuals would do to our democracy. Were they sick with jealousy also Joe? You’ve been drinking the Koolaid on Bullshit Mountain way too long. You need to hike down for provisions of reality.

Reply

Normal Joe March 5, 2014 at 10:00 am

Mancrunch, Lance, MOR, and Aspiekid, your consistent, cogent, and objective observations are exactly what is missing from our political dialogue. It has nothing to do with good or bad, only strategies and outcomes. Sometimes it appears that both ends of the spectrum are well practiced whiners. It seems that our real peccadillo is finding the way to break the over-investment chain and move the capital back into the “real” economy so the system can function more beneficially for all. It’s going to be very difficult to do when, just as it did in ancient Rome leading to their demise, it’s too easy to purchase legislation favorable to the ones with the money (which is how the rich oppress the poor).

Reply

Peter March 5, 2014 at 11:24 am

Franklin and Madison warned us….. but not of the situation we are in now – we aren’t even CLOSE to what they were concerned with. What they were referring to did exist in the early 20th century, when at one point, one man (John D. Rockefeller) was worth about 10-15% of the nation’s GDP. Individuals owned the railroads and could simply hold the people hostage for food, fuel, supplies, etc. For instance, a man like Henry Flagler was GIVEN miles and miles of Florida coastline just to build a railroad.

The internet is the 21st century’s “railroad”, and many have gotten rich from it. Yet, their individual net worth is not a threat to GDP, doesn’t move elections by themselves and is not sucking the money out of the middle and lower classes’ pockets.

I think the big difference is that back in the railroad days you could just work hard and get a piece of the pie. In the internet/technology age it really separates the “intellectually skilled” from hard labor jobs, of which there are much fewer.

Reply

Man-of-Reason March 5, 2014 at 1:54 pm

Welcome back Peter.

Franklin and Madison lived in the 18th and early 19th centuries and were products of The Age of Reason where scientific thought was greatly valued and used not only in science, but also applied to philosophy, religion, and politics. They were scholars of the ancient Greek and Roman classics and well versed in history and the rise and fall of various empires. The consequence of their thinking was the United States of America, although amended along the way by other great thinkers such as Lincoln, TR, and FDR, all of whom valued scientific thought and reason.

The concentration of wealth in too few hands also buys more political influence, which concentrates that wealth even further. Big money and contributors buy the elections of politicians who will legislate favorably to their patron’s financial benefit, rather than to the benefit of all. That was as true during Plutarch’s time as it is now, and the founders were well aware of Plutarch’s philosophies as well as many other Greeks and Romans who said similar things.

It’s not so much how wealthy someone is, but rather how much money he’s willing to use to corrupt the democratic system. Although Rockefeller was tremendously wealthy, others today use much more money contributing to campaigns, super-pacs, and hiring lobbyists than Rockefeller. But regardless of the “situation” or century, the same principle holds true that money in politics corrupts and will destroy democracy if allowed to accumulate in too few hands.

Reply

Peter March 6, 2014 at 8:27 am

The only point I’d add here is that the Rockefeller types didn’t have to use Super PACs to influence anything. They controlled everything through business and true monopolies. The government came to THEM for help rather than the other way around. Again, not saying we want this either – but alot of the talk about “concentration of wealth” in 2014 makes me laugh when I think about the way things were in those days.

JB March 6, 2014 at 8:38 am

amazing how things don’t change much. Carnegie cashed out and became one of the biggest philanthropists. there were still poor people and rich people 100 years ago. Roosevelt broke up the Monopolies, but certain people still managed to get rich. They still had all the risk.

Peter March 5, 2014 at 11:26 am

The first thing we could do to help this whole problem is quit trying to extend ourselves all over the world in everyone’s business (Syria, Ukraine, etc.). THAT is what led to the fall of most of the major empires, not concentration of wealth.

Reply

Aspiekid March 5, 2014 at 12:20 pm

“An imbalance between rich and poor is the oldest and most fatal ailments of all republics.”
- Plutarch, Greek historian, c.100 A.D.

Reply

JB March 5, 2014 at 12:35 pm

Show me a successful Socialist Country.

Reply

Man-of-Reason March 5, 2014 at 12:47 pm

How about Norway with per capita income much greater than the U.S., and the inequality between rich and poor much less. Although marginal tax rates are much higher, unemployment is very low and their economy is booming.

Reply

JB March 5, 2014 at 1:01 pm

Norway has a population of 5,000,000 people with the Gov’t owning the oil company. So all the profits go straight to the gov’t coffers. We have 300,000,000 million people, 50 states and a greater diversity of a population. They still have a 3% unemployment. So unemployment isn’t THAT much lower. Taxes are still much higher just for a free education? I don’t see millions of people trying to get into Norway just to live in that “Utopia”. That isn’t a ton of people to be able to educate. There are 4.1 Million people just in our county here.

Man-of-Reason March 5, 2014 at 1:13 pm

Then combine them with Sweden, Finland, Denmark, and Germany, all socialist to a much greater degree than the U.S. Anything less than 3% would be very unhealthy for an economy, but is extremely low at only 40% of what we experience anyway. Go tell the Norwegians, Danes or Swedes that they pay too much in taxes for the “free” education and they’ll look at you as if you are nuts. They realize that the point isn’t how much something costs, but the value they receive for what they pay is much more important to them. That’s why you don’t see people from these countries lining up to immigrate to the U.S. any longer.

JB March 5, 2014 at 1:43 pm

http://www.futurescopes.com/wealthy-dating/7732/10-richest-men-norway

And yet, Norway has billionaires and nobody seems to hate them. Probably because they pay 70% in taxes.

Man-of-Reason March 5, 2014 at 2:17 pm

Of course not JB. You keep repeating the false mantra that the 99% HATE millionaires and billionaires. That’s simply not true. However, people realize is that we have a tremendous national debt which needs to be paid down, and we have very monied people and their corporations who’ve had the benefit of great tax cuts and now, rather than restore rates which benefited everyone in the past, many are using their wealth to elect politicians favorable to legislation which will make them even wealthier and more powerful. They want even lower taxes for themselves and to cut the services and safety nets that the middle class and poor count on. When Romney, Buffet, Gates and so many other uberrich pay so much less than so many who’s income are a slight fraction of theirs, people get angry, not at the rich, but at the injustice.

If Norway can create billionaires and a vibrant economy, even with a 70% marginal tax rate, then the U.S. can also and has so proven in the past. But Norway limits the influence of money in politics to a much greater extent than the U.S. which now, because of Citizens United, has no limits.

If you read Lances article you’ll understand that perhaps the reason our economy lacks Norway’s vibrancy is because taxes on the wealthy are so low.

Peter March 6, 2014 at 8:33 am

I’m sorry, but the 99% get a lot more votes than the 1%. Additionally, I have said on here a million times – and I’ll say it again – there is a HUGE difference between the 1% and the 0.01%. The 0.01% are your billionaires like Buffet, Gates, etc. The 1% includes people living in expensive cities like Washington, New York or SoCal who are making $350k and not living extravagant lifestyles.

It is also a myth that the entire 1% wants lower taxes. I make in the high six figures and I don’t have a problem with higher taxes at all if I felt like it would help the economy. And you know, what – when I have these conversations with my peers, most agree. What frustrates the people in my situation is the SPENDING side. If we felt like our higher taxes would “trickle down” to help the less fortunate or reduce the deficit, then we (at least I) would be supportive of it. Instead we all know it will go to waste, or to build our 15th aircraft carrier, or for a bloated mess of a universal health care plan, or to the failed war on drugs, or to meddle in other people’s problems like Ukraine, or to give money to other countries’ natural disaster programs, or mainly….. to fund some sort of program that serves the career of the politician rather than righting the fiscal ship before it crashes into an iceberg.

Normal Joe March 6, 2014 at 9:53 am

The votes that the 99% get only occur on two year cycles excluding local government entities, not on budgets, spending, or who runs what at the federal level. As far as who is actually in the “middle class,” this explanation is pretty much on point, and disturbing. http://youtu.be/QPKKQnijnsM

Reply

Man-of-Reason March 6, 2014 at 12:22 pm

Good video Joe. Very graphic and easy to understand. Here’s a followup:
http://www.youtube.com/watch?v=fbj8hTsPEzc

Reply

Ken March 7, 2014 at 5:41 am

And here’s a link to a brief article that perhaps will add some perspective and balance to this issue of income inequality.

http://www.forbes.com/sites/timworstall/2013/06/01/astonishing-numbers-americas-poor-still-live-better-than-most-of-the-rest-of-humanity/

Reply

JB March 7, 2014 at 6:19 am

I have been saying we have the richest poor people in the world. Most have indoor plumbing, a big screen TV, a cell phone, a car and electricity. Try living in India in a cardboard box or in the slums of Brazil. My wife has seen the real poverty in India. Poverty and Poor aren’t the same thing.

Reply

Normal Joe March 12, 2014 at 9:50 am

Is this supposed to make us feel better because the 15% of Americans who are technically are at or below the “poverty level” in the US are not as bad as some of the most putrid and unhealthy areas of the world? In ancient Rome, the slaves lived better than some of their free countrymen, but that was because of Roman engineering and the knowledge of sanitation and the need for clean water. Those states that have the highest levels of poverty as well as the highest per capita use of food stamps and other social safety nets are, ironically, “Red” states and have the lowest average life expectancy in the country. If one chooses to repeatedly demonize the working poor as throw-away people, one must also expect to be the object of much derision for their callous and disrespectful behavior. Even business in America knows better and compares themselves to their “peer groups” and not the most under-performing competitors.

Reply

Aspiekid March 5, 2014 at 12:18 pm

This historian disagrees:

“What Causes Nations to fail: Concentrated wealth arguably caused the collapse of Ancient Egypt’s New Kingdom, Rome, Pre-Islamic Mecca (Islam is, in part, a reaction to concentrated wealth), Byzantium (the 50 years prior to Manzikurt), Medieval Japan, Hapsburg Spain, Bourbon Russia, Coolidge/Hoover America (triggering the Great Depression, Hitler’s rise, WWII, and the holocaust), Bush II America (triggering the Great Recession). The general pattern: Wealth/power concentrates, the wealthy/powerful use their interest to avoid paying taxes, civil institutions fail.”

– Tim from Mesa, NY Times Comments, 2012

Reply

JB March 5, 2014 at 12:34 pm

Bush didn’t cause the recession. Banks and home buyers did. The rest of the stuff is 100 to 5,000 years ago. You really think the Roman Empire economy is the same as the USA today?

Reply

Man-of-Reason March 5, 2014 at 12:59 pm

I think that Lance had a point when he said that when the Banks loaned all they could to those who were stable enough to pay such loans back and they still had so much cash on hand, they began loaning money to those who they knew couldn’t pay back the loan. They then packaged the risky loans in bundles and sold them to the unsuspecting suckers who were stuck with the losses. But the problem was created by an oversupply of money caused by reducing the taxes on the wealthy and sold to Americans as necessary to stimulate economic growth. Does that sound familiar?

Reply

JB March 5, 2014 at 1:17 pm

I don’t think the banks knowing loan money to people that can’t pay back the loan, but I do know for a fact that Washington Mutual loaned money and assumed the house value would keep going up so that if they had to foreclose, the house would be worth more. Guess who lost on that bet. It didn’t matter if a house is upside down as long as the payments are being made. The other issue with the MBSs is that they were/are valued mark to market so when the home values fell, so did the value of the portfolios. Again, if you are making your payment, who cares what the value it. The other issue is that the sub-prime loans got mixed into prime loans so that the prime loans were taking bigger hits than they needed to. If the subprime loans had been kept better records, maybe less people would have bought those portfolios causing the banks to pull back on the subprime loans. Again, 5 states caused the majority of the housing failure. California, Nevada, Arizona, Florida and one other. Texas fared well during the crisis mainly due to our regulations that you couldn’t take out a 125% cash out refi on our houses. using your house like an ATM certainly didn’t help the housing situation when people became $300K underwater. Being $50K underwater is more palpable, but once they spent that money on renovations or vacations or cars, they were never going to recover. So, in essance, the homeowner got greedy and wanted to cash out the equity and hope the value kept going up. Guess who lost…

Reply

Man-of-Reason March 5, 2014 at 2:49 pm

The check on the homeowner is the bank. When I first purchased a house, I had to put 20% down, show that my annual income was at least one third the purchase price plus any other loans I had out, show that I’d been employed by the same company for at least three years, have good credit history and had paid off any loans on time, and that my monthly payments on all loans was no greater than a quarter of my monthly income. Those rules had been standard for many years and were the common wisdom among bankers. You see JB, at that time, the loans were kept by the local banks and S&Ls and default would have been bad for business.
.
But regulations we loosened greatly between 1981 and 2008 and eventually, loans could be packaged and sold by the banks, thereby realizing an immediate profit out of which the bankers received bonuses. There was no longer an incentive to assure that loan would be paid back since any default was someone else’s problem. Therefore, bankers got greedy and knowingly sold not only residential, but also commercial real estate to buyers who would not have qualified under previous in house rules or government regulations. They got paid their bonuses, while the suckers who bought the loans got shafted.
.
Sure, you can blame some $13,000 per year strawberry picker for buying the bullshit from the banker who sold him a $750K home, that prices always rise and therefore, he’ll make lots of money when they sell, but is that really honest. It’s the banker who’s responsible for the sale to a qualified party, and in most all instances, the bankers knew the score.

According to Lance, this temptation was a result of too much wealth looking for investment and they simply ran out of qualified buyers. Too much product and not enough buyers, the cause of the Great Depression, also applies to the cause of this one.

JB March 6, 2014 at 8:36 am

Just because the bank says you can borrow $750K doesn’t mean you should. We were approved for a $500K home loan and we bought a house for $225K. Well below what we qualified for.

Peter March 6, 2014 at 8:37 am

Agree with you on this one MOR. Everyone shares the blame in their stupidity in the banking crisis, but ultimately if the government is going to serve any purpose it would be to help stabilize the economy the best they can. By knowingly loosening the underwriting regulations and requirements they were helping fuel a housing bubble that was bound to explode.

Man-of-Reason March 6, 2014 at 11:51 am

You’ve got a good grasp of the problem Peter. I’m disappointed that many of the measures we know would prevent this from happening in the future, haven’t been enacted by this congress. For instance, we still have “too big to fail” financial institutions.

jamie March 5, 2014 at 8:30 pm

Unfortunately many who get that much , earn lots via the investments the money makes and this is hidden in corp accounts, trust, overseas to protect from taxes.. , some with businesses who do earn that sometimes can not reveal much of it..

And its great that there are people who do well, problem is that there not enough good, engaging work for the new young (especially) educated folks.. There’s about 1 good job for every 10 people who are good for it..– we need to reinvest the big profits and big wealth to reward/spread and JOB share..maybe job choice/assign.. so more people who want to do stuff like be a finance analyst or sit behind a desk and apply some interesting skills get a chance..

Reply

Peter March 6, 2014 at 8:41 am

I am a professional financial planner who makes well above the cut-off of this article – and I wish someone would tell me where all these hidden corporate accounts, trusts and overseas accounts are so that I can quit paying the 40% in taxes I have been paying.

Not sure why nobody believes me here, but this stuff is simply not available to 99% of the 1%. I work with over 500 households where the majority of them make over $250k – and my JOB is to help them however I can. Other than maximizing their company retirement plans (limited to $23k/year) and purchasing tax-free bonds, there isn’t much else we can do to reduce their income tax burden.

If there was a place for the 99% to complain it should be the fact that about 90% of my clients are Federal employees or Federal government contractors. The complaint should be that the government is PAYING this much money out and making millionaires of their employees.

Reply

JB March 6, 2014 at 8:44 am

Amen. How come nobody complains about the Hollywood 1% making $20M a movie? A CEO earns his money WAY more than an Actor.

Reply

Lance March 6, 2014 at 12:51 pm

“nobody complains about the Hollywood 1% making $20M a movie” because actors and athletes are one of the very few rich who actually to pay a higher percent of their income in taxes than middle class taxpayers as much of their income in in the form of wages like the middle class. The wealthiest 1% pay an average effective tax rate of 17% of their income as compared to 16% of all middle class taxpayers. Since there are many in the wealthiest 1% pay that pay an average effective tax rate above 17% such as actors and athletes, that means there are many like Warren Buffet who pay much less than average effective tax rate of 17% of their income.

We are not complaing about the rich havinf lots of money, the complaint is that they used their political power and ownership of the media to have the types of income get be taxed at much less than the taxes on wages.

How could you not get a vast increase in inequality when you make the tax rate on the types of incomes that the wealthy receive such as dividends, capital gains and corporate profits much less than the tax rates on wages and make 99.9% of all estates exempt from the inheritance tax?

“..The enormous shift in tax policy favoring the rich has been a world-wide phenomenon going on for many years. After the Socialist party candidate François Hollande won the presidential election, France enacted tax laws that gave France the most progressive tax system among the 20 largest industrial nations. However, world-wide the tax systems have become so much less progressive in the past decades, that if the tax code that France has today were applied to France in 1969, France would have had the most regressive tax system among the 20 countries in 1969.
A major component of the shift of the tax burden from the rich onto the middle class involves the corporate income tax, whose incidence falls entirely on the owners of corporations. Corporate income taxes were 4% of GDP in 1969 and are now less than 1%…”
http://seekingalpha.com/article/1543642

Reply

Man-of-Reason March 6, 2014 at 11:43 am

Which federal employees make more than $250K?

Reply

Peter March 7, 2014 at 6:25 am

Lance said – “The wealthiest 1% pay an average effective tax rate of 17% of their income as compared to 16% of all middle class taxpayers.” This is absolutely, 100% NOT true. Please back this up with evidence.

MOR – Was talking about households really…. many make more than $100k and max out at $170k – so if both spouses work there they go over the $250k easily. However, this doesn’t include folks that are paid locality pay – particularly overseas. The overseas folks can make twice that with all expenses paid.

Reply

Lance March 8, 2014 at 10:35 am

The data on effective Federal taxes by percentiles is available at:
http://www.cbo.gov/publication/44604

Peter March 8, 2014 at 2:12 pm

Lance – the page you linked shows that the top 1% pays a much higher rate than the middle class.

Ken March 6, 2014 at 5:55 am

I found this interesting to note as far as who the top donors are who are trying to influence legislation. Thirteen of the top twenty are Democratic leaning, four are on the fence (contributing more or less equally to both parties), and three are Republican-leaning. https://www.opensecrets.org/orgs/list.php

Reply

Normal Joe March 6, 2014 at 3:15 pm

Ken, good summary of the past 25 years. However, the site is quite upfront in acknowledging that there have been significant changes lately subsequent to Citizens United.

“For example, this list does not include casino magnate Sheldon Adelson. He and his wife Miriam donated nearly $93 million in 2012 alone to conservative super PACs — enough to put him at No. 2 on this list. Similarly, the list excludes former New York City mayor Michael Bloomberg, who has donated more than $19 million in the past two years, largely to groups that support gun control. Neither Adelson nor Bloomberg — or the organizations they report as their employers — qualifies as a “heavy hitter” under our current definition. It’s also important to note that we aren’t including donations to politically active dark money groups, like Americans for Prosperity, a group linked to the Koch brothers, or the liberal group Patriot Majority — because these groups hide their donors; see a list of top donors that we’ve been able to identify to such groups. We are working to revise this list to take into account the new realities of campaign finance created by the Citizens United decision, but as it currently stands, there are significant omissions.”

I found the charts relating to the Lobbying Spending Database very intriguing and would love to know what issues these funds were targeting by donor. For all the data it would be very helpful to categorize by political objective other than which party was impacted.

Reply

JB March 6, 2014 at 11:40 am

These guys should be going to jail. Accountants don’t search for fraud unless they have a reason to. It isn’t hard to cook books, but most won’t try.

http://www.chicagotribune.com/news/sns-rt-us-dewey-execs-criminal-20140305,0,3189470.story

Reply

Peter N March 6, 2014 at 9:32 pm

I have learned a lot from this thread. My fellow Americans and not fellow Americans. They want what is mine. I have NO allegiance to those that want what is mine.

To paraphrase Thomas Sowell, WHAT IS YOUR FAIR SHAR OF OTHER PEOPLE’S MONEY.

It isn’t the progressive tax laws I object to. It is when they raise the rates to pay for some losers.

Reply

Peter March 7, 2014 at 6:27 am

The hardest part to swallow is that when I file my taxes for 2013 I will see that I paid almost $300k in Federal taxes. And yet someone will tell me that I’m not paying my fair share. My mother, father, brother (and his wife), and my mother-in-law combined will pay about 1/10 of what I pay in taxes. But somehow I’m a selfish rich guy who shouldn’t be reluctant to paying a “fairer share”.

Reply

JB March 7, 2014 at 6:36 am

My wife paid over $90K in FIT on her W2 and I don’t even make what she pays in taxes. We are on the cusp of breaking $400K as a couple, but we pay PLENTY in taxes to the govt. Can we afford to pay $2,000 more? Sure, but WHERE DOES IT STOP?? People that make $400K a year usually live in a neighborhood that is relative to their income, but we bought a house well below our means. so every tax dollar the go’vt takes is one less dollar the ‘rich’ have to spend on dinners out, vacation, or any other disposable income item. We save 45% of our income so we keep the money out of economy for when we are retired, which will be sooner than later.

Reply

Ken March 7, 2014 at 6:56 am

I think this is why you rarely hear proponents of the progressive tax system talk in terms of actual dollar amounts paid in taxes. It’s nearly always in terms of percentages. I think when actual dollar amounts are shown it sheds an entirely different perspective on the subject, as far as who is contributing what.

Personally, I also have a bit of a tough time with the word “progressive” as it is used in the taxation context. The word has a common meaning which is much different, and much more positive, than the taxation meaning of the word. In the common, layman’s usage of the word, “progressive”connotes something positive, moving forward, getting better. In the taxation meaning of the word, “progressive” means graduated, in the sense that the more money you makes, the greater percentage of your income is taken from you.

I think this is double entendre meaning of hte word “progressive” is exactly why proponents of graduated taxation coined the term. It connoted something positive, when in fact the question of whetehr it is positive or negative is debatable. I think a more accurate, less manipulative word is “graduated”. Or, if you wanted to create an emotional equaivalent to “progressive” but on the other end of the spectrum, we could use the word “punitive”.

Reply

Aspiekid March 7, 2014 at 9:47 am

“Progressive” simply means that those who have more income pay progressively higher tax rates. The term has been around long before the income tax was codified in the constitution and was never meant as a psychological lever for propaganda such as, “Death Taxes” or “Redistribution of Wealth” are used today.

Reply

Aspiekid March 7, 2014 at 9:39 am

People are going to say that you are selfish, not because you are in the 1%, but because you advocate letting you mom, dad, brother, and mother-in-law pay a greater percentage of the tax burden. You see Peter, for them to pay the same or greater percentage than you would cause them a great deal more pain. These are the people who made it possible for you to earn so much. (Well, maybe not your mother-in-law, although I wouldn’t say that to your wife.)

Reply

Peter March 7, 2014 at 2:07 pm

I don’t think they should pay more in taxes. Never said that. As it stands now, several of the people I mentioned pay NOTHING in income tax. My mother-in-law has millions of dollars and pays very little in tax, since most is in tax-free bonds or low-interest bearing accounts and all the taxable income she has is social security.

I don’t think they should pay the same percentage as me. I’m not the one complaining about the current tax system, even though I pay considerably more than everyone in my family (both on an absolute and percentage basis).

But I will say this – if any of them start telling me I am not paying my fair share, I have every right to be taken a bit aback by this, don’t I?

Reply

Aspiekid March 7, 2014 at 2:23 pm

Okay Peter, But if they don’t pay more in taxes, and you don’t pay more either, then much must be cut from existing programs, many of which benefit them. What would you cut to not only put the budget in the black (abt $500 billion next year) and also pay off the national debt of 17 trillion in a reasonable amount of time? Which of your proposed cuts wouldn’t lower your extended family’s standard of living?

Whether they pay more in taxes, or have government programs which benefit them cut, it’s all the same in the end. That’s a simple reality.

Peter March 8, 2014 at 2:18 pm

Exactly!!!! MUCH must be cut. And there is no part of the budget that would be spared. There is certainly plenty to cut in the intelligence, military and defense budgets for instance. And yes – it would hurt us all somewhat temporarily but we would save our nation from financial ruin. The poor would benefit the most in the long run, as our country’s financial stability is the reason why they live at a higher means than almost any other nation’s poor.

I would also raise revenues by legalizing and taxing drugs and online gambling (and save money by eliminating the “war on drugs”) and by eliminating tax exemptions for religious organizations.

The point is this ….raising my 37% that I paid in taxes in 2013 to 40% isn’t going to solve anything….we will still have a giant deficit and have this same conversation 5 years from now – that I should pay more. We HAVE to cut spending. It is just so convenient for you to think I should pay more, but the numbers show that it doesn’t solve the problem.

Normal Joe March 7, 2014 at 7:23 pm

It’s very hard to believe, but our problems with our economy began when a well liked actor, presidential candidate, and eventual POTUS told a simple story over, and over, and over again. A story that appealed to the most base of human instinct and reoriented a large segment of the population from the big bad corporations, to big bad government. A recent conversation hosted by Bill Moyers with Ian Haney Lopez explains it’s genesis, and how it set the people against each other at their own expense.

Ian Haney Lopez: “So, we know Ronald Reagan used talking about welfare queens, but he also had this other stump speech that he would give. He would speak to his audiences and he would say, “I understand how frustrating it is for you when you’re standing in line at a grocery store waiting to buy hamburger and there’s some young fellow ahead of you buying a T-bone steak with food stamps.

Now, the first time he told that tale, it wasn’t some fellow, he said, “some young buck,” and the young buck was a rationally coded term that stood for a strong African American man and so that term… that moved from being a dog whistle to an outright racial provocation. Reagan backed off and he started talking about some young fellow buying a T-bone steak with food stamps.

Thank about the characters in this story. The first character is the person buying a T-bone steak with food stamps and that’s conjuring the image of the lazy minority who’s strong, who could work, but doesn’t want to work and prefers to be on welfare. But the other image is the you in that story, who Reagan’s talking to and the you, ostensibly, the voter, the hardworking taxpayer, the law-abiding American, that voter, that hard-working American implicitly has as racial identity and that’s white.

So, there you can see this racial narrative; you, Reagan, is saying to white audiences, “You’re being taken advantage of. There’s a third character here; government. It’s government, ostensibly, that’s taking advantage of whites, that is taking their money through taxes, and then giving it to these undeserving minorities. So what did Reagan suggest? He suggested tax cuts. You shouldn’t have to pay taxes to a government that’s just taking your money and giving it to minorities and, indeed, what did he do? He enacted tax cuts. In the first year of his tax cuts, a $164 billion went to American corporations.

Over the 1980s the Reagan tax cuts transferred a trillion dollars to America’s top 1%. Yes, voters got the tax cuts they thought were aimed at cutting off undeserving minorities, but, in fact, it was the politicians that were showering money on the very richest Americans. We have to understand the way in which something has fundamentally changed in American politics.

We used to understand that the biggest threat in a political life was the power of concentrated money. The power of big money and of corporations to hijack the marketplace and hijack government. But now Republicans for 50 years have been telling voters the biggest threat in your life is that minority is going to hijack government. The government has been taken over now serves them. So when white voters vote against government, they think they’re voting against minorities, but, in fact, they’re to give over control of government back to the very rich, back to the big corporation.”

Reply

JC March 7, 2014 at 11:23 pm

Right on the money!(sic)

Reply

Mancrunch March 8, 2014 at 1:36 am

Whoa, I’d forgotten about Reagan’s stump speeches. You’re very right and put the chain together nicely. Well done. Thanks.

Reply

Man-of-Reason March 8, 2014 at 1:58 am

One thing I’ve noticed throughout this long but very civil discussion is that many here with differing opinions have good reasoning abilities and many of the same values. What separates them is there perceptions of the government, the poor, and the influence of money from corporations and wealthy individuals on our political process. Also known as “facts”.

What’s lacking is an understanding of the narrative you just expressed about how we got here, and facts as to whether “that young buck buying steak with food stamps” actually exists in quantities that should cause real concern. I’m old, have waited in many grocery lines, yet have never encountered any such event. But had I, I’d want to know exactly how prevalent it is and what it means to me. Does such waste cost me $5, $50, or $500? And how much will it cost me to correct it? Like someone said before, a store doesn’t pay $5,000 for a detective to stop $50 in shop lifting from happening.

Your post is a good beginning however. Good job.

Reply

Peter N March 8, 2014 at 9:03 am

I have never seen anybody buy a steak with food stamps. However, I have seen people a few times buy staples with one purchase and use the money they didn’t have to pay for food to buy beer or cigarets in a separate purchase. Money is fungible. For all practical purposes these people are buying the cigarets and beer with food stamps.

As for the waste, there shouldn’t be any. The whole idea of giving people money and expecting them to use it as you intend is crazy.

Reply

Man-of-Reason March 9, 2014 at 9:41 am

You’re absolutely correct PeterN, those who smoke and drink are going to scrape together enough money to continue those habits regardless of benefits received. It would be silly to expect anything else, nor do we tell SNAP recipients that they can’t do so. The food mostly goes to their families. Right or wrong, it doesn’t matter.

I especially like your last sentence. People are not going to make the same decisions about how they spend their money that you or I would. But we must give them the freedom of choice regardless, even the ability to make what we may consider very stupid decisions.

Peter March 8, 2014 at 2:25 pm

That is a good point MOR. Always at the heart of these debates is the frequency of extreme stories from either side. The guy buying steak or seafood with food stamps, not working and living on assistance is similar to the “rich” paying 10% in income taxes and using offshore accounts and loopholes. Very few of us actually know either of these people personally….and while they do exist the extent of which is certainly in question.

Most people on the “poles” of this debate are the rich paying 30% or more in income taxes frustrated with the waste and the rhetoric that says they should pay more in taxes … And the lower income earners who have trouble making ends meet.

Reply

Jeremie March 7, 2014 at 6:53 am

Two items representing the biggest mis-information distributed re: this topic:

A) People with income over $400k represent a homogenous group – while this is also simplistic it should be noted that there are really 2 main groups in this category 1 – those who are in working and earning salaries over $400k (usually in 2 earner families) – these individuals are being horribly disincentivised from continuing what is generally the most in-demand and greatest benefit to society work that they are engaged in. They pay upwards of 35% on their taxes (as high as 42% with the new medicare taxes). The current system only encourages the second earner in these families to simply stop working (which often leads to unemployment for anybody they have hired to assist with what is usually a professional career). 2 – those who derive nearly all of their income from previously procured investments and don’t actually work for their income (frequently the uber-rich, but plenty in just the “rich” category) – these individuals contribute less to society and pay significantly less in taxes since all of their income is from capital gains.

B) Wealth discrepancy in the United States is worse than at any time in history – This represents one of the most ridiculous assertions ever. If you measure wealth solely in terms of currency on hand, maybe that is true. The term “wealth” has been defined variously, however, and a common interpretation would be all of an individual’s assets, including physical, emotional, & tangible. The notion that an individual can have immediate access to shelter with running water, working electricity, sufficient calories for health (not to mention an overabundance facilitating gross obesity), time for leisure, and affordable devices that bring all the libraries in the world along with endless entertainment directly to your fingertips and yet still be “poor” is laughable – not just to the 2.5 billion people on the planet 50 years ago, but to the over 2 billion people living in rural China, North Korea, Mongolia, many parts of Africa, etc.. The poor in the United States happen to live in the same country as individuals who have amassed great fortunes, but that doesn’t even come close to making them truly “poor” on either a global or historical scale.

Reply

Peter March 7, 2014 at 7:48 am

AWESOME post! Well said….. Couldn’t agree with you more – particularly with B). To me if you add the distinction between the .01% and the 1%, you covered the major bits of misinformation and BS rhetoric revolving around this topic.

Reply

Normal Joe March 7, 2014 at 10:01 am

While it is understandable why you would want to compare the poor in the USA to, let’s say, Somalia, it sounds more like searching for empirical data to support you preconceived beliefs. When you abandon comparing apples to apples, almost anything can be rationalized in one way or another. One philosophical premise in this thread is not only the distribution of wealth, but it’s well documented unintended consequences. Redefining the definition of “wealth discrepancy” only serves to obfuscate an obviously clear warning sign. Is there a causal relationship? It’s hard to say unequivocally. But, there is a documented tendency. It is also a considerable exercise in self control to ignore all the conflicting noise that has been carefully crafted to do just that.

Reply

Peter March 7, 2014 at 2:09 pm

OK – then compare our poor to France. Or Italy. Or India, China, Portugal, Thailand….. Our poor (the bottom 10%) live better than about 2/3 of the world.

Reply

Aspiekid March 7, 2014 at 2:27 pm

I think the poor in France live a great deal better that our poor in the U.S. Their healthcare is rated best in the world, and no one goes hungry that I’ve ever heard.

Reply

Peter N March 8, 2014 at 9:19 am

Wealth discrepancy won’t go away. There are always those that can do better than others. Modern society and technology has made it so that small differences in ability get greatly magnified. There isn’t much you can do about that unless you want to kill the goose that lays the golden eggs.

Meanwhile, I just got back from a trade show. I was told by several people they were having a hard time filling technical/engineering and sales positions and this has hurt their ability to do new projects. There are plenty of jobs out there for qualified people. The key is being qualified. These jobs are not 400K/yr jobs but they are a good start.

Mean while, Obama should be impeached for fraud. Our company can not keep its health care plan. We had to switch. Now healthcare premiums are itemized person by person and kid by kid so there is no more insuring a family. One must insure each kid. This will raise our rates. On top of that there is one employee who’s wife has cancer. The new plan will not cover a drug she needs. We/the company are paying for that. :(

If those that selling shares in a movie can be arrested and charged with fraud for not telling the truth then why can’t Obama for telling the most expensive lie ever?

Reply

Man-of-Reason March 8, 2014 at 1:04 pm

Yes, there will always be rich and poor, but the disparity has never been so wide in the U.S. in our lifetimes. And income and capital disparity certainly isn’t so wide in Europe and Japan. The goose laying the golden eggs is the middle class American citizen. That’s who purchases products and services that the owners of businesses and corporations provide. 70% of the U.S. economy and a great percentage of other nations economic growth is dependent upon our middle class. When the boss reduces the employee’s share of what he produces because he feels entitled to more (he is, after all, the “job producer” he reasons), fewer of the boss’s products are sold, overproduction results, and growth stops (causing depression per Lance). Regardless of the semantics, the goose dies.

Higher marginal tax rates have historically made little or no impact on incentives to create new products and improve technology. And, high tax rates have never caused a recession. Conversely, lowering tax rates as Bush did, didn’t stimulate the economy enough the justify the damage created by increasing the national debt or reducing services for the middle class, plus it ended in recession just as Some economists predicted. Trickle down has proven to be great for lining the pockets of the 1% at the expense of the middle class and even more so, the poorest Americans.

Reply

Man-of-Reason March 9, 2014 at 9:20 am

The trouble with your assertion is tha Americans do not compare themselves with Mongolians or Africans. When we speak of the “happiness index”, societies whose members are most satisfied with their place and role in their respective communities, we find that these members compare themselves only with others of the same society. The Danes are number one, while Cubans are close behind – two very different societies and under two very different governments. They have one thing in common however. Both are egalitarian. The gap between rich and poor in these nations are much less that here and therefore, no one considers himself quite so poor as do the lower wage workers in Silicon Valley for example.

The middle class today live better than the monarchs of old, but that doesn’t make them any happier, nor should it. In the face of so much wealth increasing the bottom line of the 1%, they’d like themselves and their children to share in the American dream also. The following link was this mornings news and gives great perspective on this I believe:
http://apnews.excite.com/article/20140306/DACC8A881.html

The perception of being left out or hind has tremendous potential to do great harm, divide the country, and create civil unrest.

Reply

Jeremie March 9, 2014 at 2:17 pm

Aspiekid – The poor in France are worse off than the poor in the US. If you have been there you will probably agree, if not my experience is that they certainly aren’t any better off.

Man of Reason – Your assertion that baseline level of poverty is not as important as Range of Wealth is not a comprehensive assessment in my opinion. There are important aspects of poverty that are more likely to lead to civil unrest and crime than others. A society where large numbers of individuals don’t have access to basic items such as food and shelter is more likely to lead to violent crime and social upheaval. A higher baseline society where there is a wide range of wealth will no-doubt lead to grumbling among the lowest tiers of wealth. Grumbling is not violent upheaval. Couch potatoes with access to food, shelter, and a television will always ask for more handouts, but are unlikely to pick up the pitchfork and skewer the business owner selling them cigarettes and soda.

A progressive tax rate makes some sense within limited parameters. IMHO once you start taxing above 30% on wages I think you are limiting your economy not improving it. The biggest mistakes in our current system is that we tax WAGE earners (particularly married two income families) at a top rate in excess of 50% for the second earner (assuming the first earner makes 450k, the second earner’s marginal rate would start at 39.6% + 2.9% medicare + 6% SS + X% state income tax) – why are we disincentivizing that second earner? Taken in a vacuum it is easy to say that this “high income” family has more than enough and should give more back to the government because they don’t need it. That’s a very short sighted view. Ultimately, we want that second earner out there adding to our nations GDP, but when that family (of 2 professionals) looks at hiring a nanny to care for their children (30+k?) and then considers more than half of everything they make will go to the government they drop out of the work force entirely. I know at least five two doctor families in a town of 115,000 who have made this decision (and I’m sure not all of them are at the 39.6% tax rate, but even at 35% the second earner is looking at 45% tax on all their income) . The result is the loss of hundreds of thousands of dollars (probably over a million dollars) our society has put into training the highly educated second earner and ZERO benefit to society. Makes no sense at all.

Meanwhile, truly rich families who derive all their income from investments are taxed at 25 % on their capital gains are also discouraged from actually working for all of the same reasons above. It would make more sense to have a progressive tax rate on investment income over a million dollars and to decrease the rate on wages. After all wages imply that something is being produced and added to our nations’ economy while investment income is merely the result of the production of these wage earners.

just mho

Reply

Aspiekid March 9, 2014 at 3:14 pm

You may be right about France, although I’ve heard but not verified that their poor are better off. But consider Europe as a whole, or even two countries, Germany and Sweden. These two countries have embodied the right to an adequate level of living in statute. The U.S. does not.

Sweden:
Sweden uses the reference budget to determine the social welfare allowance. Reference budgets are expenditure patterns for different types of households. To ensure transparency and legitimacy, the reference budget is an objective tool used to calculate welfare allowances every three years. The reference budget is more than a minimum budget and includes more than basic needs such as leisure activities.
The reference budget calculates the daily expenses of a family, which include, food, clothing and footwear, hygiene, recreation/leisure, consumables, newspaper, radio, TV and telephone. The welfare allowance is then used to top up the disposable income of families to the amount indicated by the reference budget.

Germany:
A test case brought before the Federal Constitutional court in Germany in 2010 established a constitutional right to a subsistence minimum for an existence in human dignity. The Hartz IV decision stresses that there is a unified and all?encompassing fundamental guarantee that covers “both the physical existence of the individual, that is food, clothing, household goods, housing, heating, hygiene and health . . . and ensuring the possibility to maintain inter?human relationships and a minimum of participation in social, cultural and political life, given that humans as persons of necessity exist in social relationships.”
The legislature fixes the actual level of benefits using a transparent and appropriate procedure on the basis of plausible methods of calculation according to people’s actual need. We do nothing of the sort here in the United States. Need isn’t taken into account. Only politics of how much we are politically willing to pay. It’s only a “gut feeling” emotional decision with 50% believing it borders on too much and the other half believing it too little, but without commonly accepted objective data, also know as “facts” to help us decide.

I’m sure that if we study it objectively, the poor of many first world countries would fare better than our poor citizens. Unfortunately, we rank first in few areas any more, military spending and incarceration rates being the exceptions.

Reply

Jeremie March 9, 2014 at 3:43 pm

Hard to compare two of the most racially homogenous countries in the world that severely restrict immigration (illegal or legal) with a country that can’t control its borders and has a reputation for being a land of opportunity thereby attracting individuals from around the world who necessarily start out poor before making an effort at success. Many European countries require a certain amount of wealth before they will even let you emigrate there. Additionally, its much easier for most people to stomach a government revenue draining welfare system when any individual benefitting from it is likely at most 2-3 generations removed from your own family tree.

JC March 9, 2014 at 4:55 pm

You must also consider that Sweden’s population is smaller than New York State and Germany’s is roughly equal to western US. We currently have more unemployed than the population of Sweden.

Aspiekid March 10, 2014 at 12:51 pm

My point was simply that the poor in many first world nations do live better than ours. If anyone thinks being on SNAP, Medicaid, or other forms of assistance make the lives of the poor more than anything but desperate, you really need to take a much closer look. Ask a social worker or other who work closely with such families.

James March 8, 2014 at 11:45 am

Bottom line is if you make more you have to pay more but the tax bracket should be the same as any one else if not more.
If the top 3% are so less in number where is all this noise coming from ? Well money is making all that noise and it is quite a bit of it.
Last two decades have not seen rise in wages for middle class people in terms of inflation as we know it.
So if nothing is done money is not going to flow automatically that is what it proves. Trickle down does not work as ‘The Super rich’ wants anyone to believe.
They are the bosses of the economy and the country and makes the rest 97% or more of the population as if we have live on their handouts.

US economy has disproportionately helped the super rich and the only reason for that is political process favors buying political interests.

If the law makers are really working for the super rich then what can be expected.
So basically politicians more from Rep. side try to white wash the red states. I would call them ‘dumb’ population under issues which are not of any consequences to the pockets of their ‘masters’ (super rich). Such issues would be religion, anti-immigration, anti-gay and so forth.
Democrats do not engage in above but they tend to support unions which are also sold in a way not to make a dent in the super riches’ pockets either.

So the end game is lost for most of Americans. If we did not have the arms and strategic alliances (thus far) and the dollar to protect we would be a mediocre economy and struggling population ready for mass movements any time. Slowly but steadily country is marching there.
The problem would be ultimately for the Super Rich though ! There are no safe havens out there.
They can ship jobs to China or other low wage countries not themselves or their families. (at least not for couple of decades).

So while tax collection is low, more pressure to cut the budgets. What do we have to see, less police (more crime/disturbances), bad schools-factory for useless generation not capable of fetching even those jobs that are available.
Thus feeding millions to this sacrificial fire of Greed of few who call them under threat !
What is under threat is the nation whose political machinery is decaying because of being soaked in money and we all know where it is coming – the poor ‘Super Rich’ class of the American society.

Reply

JC March 9, 2014 at 5:55 pm

Everyone it seems, is talking about all the problems and how it hurts them, but no one is talking about any solutions. Here is my list. it is not comprehensive, but it’s a start.

Step 1. Freeze all new legislation for a period of two years. In that two year span audit all currently enacted legislation and repair what is broken.
2. Enact a 50% Capital Gains tax.
3. Eliminate all income tax below 1 million dollars.
4. Eliminate Welfare for any healthy adult person.
5. Any healthy adult person wishing government assistance must enlist in a direct government job. Job will be randomly assigned, based on application exams from: the military, homeland security, department of transportation, federal infrastructure, and federal administration. All government jobs are temporary in order to learn skills. No federal job shall be held by any person for longer than 5 years.
6. The minimum wage shall set to GDP.

Reply

Normal Joe March 9, 2014 at 10:52 pm

Good start JC. Here’s my initial thoughts to help get the ball rolling.

1) Eliminate the limit on earnings subject to FICA taxes.
2) Enact campaign finance reform that will overturn Citizens United and remove “dark money” from the equation and restore limits on personal contributions. Ideally, all campaign finance should be controlled by a central public fund eliminating personal contributions entirely.
3) Require that all lobbying activity must be transparent and every legislator at the state and federal levels must report on all meetings with lobbyists and the purpose of the meeting.
4) Implement an apolitical national voting commission to oversee redistricting and responsible for all federal elections. Standardize the voting process across state lines to eliminate waste and inefficiencies with all the different methods in use today including advanced voting timelines.
5) Create a public/private funding mechanism to fund infrastructure improvements and put people to work:
Upgrade the electric power grid in the entire country;
Implement an aggressive bridge maintenance/replacement program;
Implement an aggressive road maintenance program;
Identify areas where transportation infrastructure will face higher levels of use and put into rolling 10 year plans to anticipate changes with improvements;
6) Enact a 33% Capital Gains Tax.
7) Eliminate the Estate Tax.
8) Raise the Minimum Wage to $15 and then tie it to GDP.
9) Enact legislation linking student loans to the Fed Funds rate (this area needs extensive changes with regards to limits of liability and transference).
10) Create a Corporate Executive Tax based on the ratio to the median corporate employee wages. Let’s say for argument, an executive’s total compensation (current and deferred) exceeds, for this example, 200 times. The corporation will pay a penalty based on the difference between the 200 and the actual.
11) Link corporate tax rates to a median of a set of other industrialized countries, leveling the playing field across the world for US Corporations.

Reply

JB March 10, 2014 at 7:47 am

So if I pay FICA making $1M a year, do I get to get paid back what I put in? SS is already capped at X dollars per year no matter how much you made. So if you made $1M and only put in up to $110K, you don’t get more SS. Also, if it was uncapped, it will only be a drip into the whole system. Again, it won’t boost the amounts a poorer person would get.

Reply

JB March 10, 2014 at 7:48 am

Why should someone’s pay be doubled when they have minimum skills? All that will do is raise the pay scales for everyone else. Would you want to be a manager and have the MW person making the same or a little less than the manager, who has more responsibility?

Reply

Aspiekid March 10, 2014 at 8:12 am

I’ll know that you are serious about managers making more than employees when you advocate raising the wage of the fire chief in your community. He works 24/7, is highly skilled over and above the other firefighters and officers, yet doesn’t make anywhere near what his subordinates do when counting their overtime.

Reply

JB March 10, 2014 at 8:17 am

They don’t hire Fire Chiefs with zero experience in the field. They work their way up the chain like those in the military. I guess you want some private leading troops into battle. They have proven to have the experience for the job. Go find any organization where the workers make more than management. Management has more responsibility than the workers. Not everyone is cut out for management.

Aspiekid March 10, 2014 at 10:02 am

Read my message again JB. Fire Chiefs make less that their subordinates even though highly skilled and working more hours.

Normal Joe March 10, 2014 at 8:55 am

I based that number on the simple fact that at the current minimum wage a worker would have to work two full time jobs just to elevate themselves above the poverty level. There is sufficient evidence now to show it does not have a direct affect on the cost of goods and the practice of large corporations such as Walmart, McDonalds, etc. subsidizing their products with food stamps and welfare would be eliminated putting downward pressure on the need for these support mechanisms.

Reply

JB March 10, 2014 at 9:17 am

Ok, it may not hurt the .01% of corporations, but it will hurt the other 99% that might be barely breaking even. If you are going down this path, then say it only applies to a company with over 500,000 employees, or some large number like the tax code, that only hurts the bigger companies.

Ken March 10, 2014 at 9:25 am

What kind of effect would it have on small businesses, which employ 52% of the people in the country? http://economics.about.com/od/smallbigbusiness/a/us_business.htm

JC March 10, 2014 at 2:25 pm

Whoever said that a manager has more responsibility than any other worker. Managers are just taught a different skill set which is no better or worse than anyone else’s. In my lifetime, I have found more bad managers than good. In my industry, if I make a mistake it is my license that is on the line, even if it is the managers fault. The manager cares nothing about that, only that he gets his work done in time to go home. I once had a manager who had a policy of not allowing the technicians to have any stock in their service vehicles! We would have to tell the customer that “there is a problem {but cannot replace that .30 fuse} and we will have to return to make repairs. By the way your fire alarm system is down and I have to return to the shop to get that part and it will cost you an additional 2 hours travel and labor on top of the 2 hours travel and labor that has already accrued.” That job only lasted 5 weeks before I couldn’t stand the frustration of not being able to do my job and amount of gouging the customer was getting. I quit. I could not afford for something to go wrong and effect my license or my ability to maintain it. P.S. he was fired shortly after I left due to customer complaints. Now corporate raiders have rushed in to takeover all the independent installers and dealers for their ROR but don’t have clue 1 about how it affects real people. I now have to pay for my own certifications and licenses, i.e. professional tax, and certifications to the tune upwards of 6000.00 a year, which is the reason I can’t get a job. Not because I do not qualify, but only that I’m not licensed prior to getting the job. But with no job there is no money to get the license, Catch22? By the way the industry has now created another revenue stream of charging the people they actually depend on to sell and service their products to pay them to learn to install their own product only to be judged certified! But everyone uses essentially the same technology as dictated by standards but purposely complicated so to require certification.

Here’s the difference, with your 400K you have a nice, well constructed home with climate control and is cozy, whereas I must survive in a tin house with 2 inches of insulation and either pay 550 a month for propane to keep it heated or 800 a month in electricity. There is no other choice, except to freeze that is. With your 400K a year, I’ll bet you grumbled when the price of fuel rose by .60 cents a gallon in the last 90 days. To pay the 1300.00 bill for the last 90 days of heat I had to sell my car.

Why is it that the 1% pay 40% of the taxes? Simple! Because the 1% has 70% of the money! Our costs are the same. Gas costs the same, milk costs the same, the basic essentials of living costs has and keeps rising. The minimum wage has not risen in 10 years.
If the only choices are a minimum wage job @ 7.25 hr for 30 hours a week, all that’s available, because no one wants to pay full time benefits, or, being subsidized by the government, which equals the same or better in some cases! What would do? No, you do not have the choice to say, start your own business, because you can’t afford the entry fees. Every penny of my income is spoken for for basic living expenses. There is no money to better myself. There is no escape. And it’s getting no better.

But I’m just ranting!

Reply

Ken March 11, 2014 at 5:15 am

For clarity, as of 2010 the top 1% did not earn “70% of the wealth”. They earned 18.9% of the wealth, while paying 37.4% of the federal income tax burden.

http://taxfoundation.org/blog/tax-rate-paid-top-1-double-national-average

Curto March 10, 2014 at 8:15 am

How does raising everybody’s taxes help you? The government doesn’t tax you and give it to me or you or the widow down the street…those dollars are destroyed. Instead of raising the SS cap, eliminate the payroll tax completely so lower income earners have more.
The government doesn’t need the income and everybody who understands monetary sovereignty understands this.

Reply

Lance March 10, 2014 at 9:57 am

Increasing the minimum wage would in many cases just transfer money from those who eat at McDonalds to those who work at McDonalds and similar establishments. At worst it is a distraction from the main cause of both inequality and the low level of economic growth which is the vast shift in tax burden away from to rich and onto everyone else.

How could you not get a vast increase in inequality when you make the tax rate on the types of incomes that the wealthy receive such as dividends, capital gains and corporate profits much less than the tax rates on wages and make 99.9% of all estates exempt from the inheritance tax?

“..Equally unhelpful in terms of addressing the income and wealth inequality which results in the overinvestment cycle that caused the depression are various non-tax factors. Issues such a minimum wage laws, unwed mothers, globalization, free trade, unionization, immigration, problems with our education system and infrastructure can increase the income and wealth inequality. However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. It is the compounding effect of shift away from taxes on capital income such as dividends each year as the rich get proverbially richer which is the prime generator of inequality…”
http://seekingalpha.com/article/1543642

Reply

Peter March 10, 2014 at 11:07 am

If you raise the cap on FICA taxes, do you still cap the benefit?

Reply

JB March 10, 2014 at 11:20 am

It would be ANOTHER 6.2% tax on the rich by taxing the SS without the person getting the benefit. That would be another 52K in SS taxes and the gov’t will never allow that person to get the full benefits. They are already talking about means testing so if you have $5M in savings, the gov’t will say you don’t qualify for SS benefits. Another way to steal money from the rich. They put the money in, they deserve the money coming back. Again, this only applies to .1% of the population.

Lance March 10, 2014 at 11:22 am

Raising the cap on FICA would help the deficit problem since social security combines a very regressive tax with a very progessive benefit schedule. Social security replaces 55% of the wages of those in the lowest income bracket but only 15% of wages in the highest bracket. If the limit on FICA was removed it would make sense to establish a new 5% replacement bracket so that that those with wages above the maximum threshold now would still continue to get more as they earn more but only on the basis of replacing 5% of their wages above the threshold.

Peter March 10, 2014 at 11:12 am

And thanks, Lance…. we have now all seen your article. :)

Reply

Peter March 10, 2014 at 1:25 pm

Still Lance – another way to tax the rich more heavily. That’s where the “savings” would come from.

Normal Joe March 11, 2014 at 1:10 pm

FICA (called Payroll Tax) is contributions to Social Security. There are many misguided people who clamor for its eradication, but that is another shell game playing with pension benefits. All the dire claims about Social Security are the result of the Post WWII baby boom reaching retirement age. This bubble will last, at most, 20 years. The fact remains that putting people back to work, and the growth of the population base will also contribute to its solvency. Some people just don’t want to admit that circumstances have a lot to do with who succeeds and who doesn’t. Why must there be a political and financial Untermenschen?

Normal Joe March 10, 2014 at 3:44 pm

One of the reasons we have an too many dollars chasing too few investment opportunities is the lack of consumer demand. That relates directly to the suppressed earning of too many of the working class. Ken raises the fact that small businesses employ 52% of the people in the country. The next question must be how many of them are minimum wage jobs? The effect could well be overstated at first blush. Henry Ford paid his factory workers a premium wage and was roundly criticized by his peers. Ford was the visionary and laughed all the way to the bank as he empowered a whole new level of consumer building the new middle class. A middle class that not only became good customers, but salesmen as well.

Reply

Normal Joe March 11, 2014 at 7:13 am

When focusing on deriving “savings” out of any plan being discussed, please remember that any tax policy that reduces outstanding debt is saving future tax dollars that would have to be addressed eventually. Interest rates are low now, but historically, this is a temporary situation. And, like subsequent to WWII, people collectively understood that sacrifices by all were going to be necessary to dig the country out of it’s mountain of debt, which ironically, exceeded our latest peak when factored as a percentage of GDP.

Peter N March 11, 2014 at 10:28 am

“However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. ”
This is non-sense and more liberal lies. So many don’t even pay taxes. Now most will have subsidized Obama care. That there are many posts on this thread that show that the top 1% pay much more than their fair share of taxes.

“Since this is an era when many people are concerned about ‘fairness’ and ‘social justice,’ what is your ‘fair share’ of what someone else has worked for?”
? Thomas Sowell

Reply

Lance March 11, 2014 at 10:53 am

When the Federal income tax was enacted one hundred years ago (primarily by the social conservatives of their day who knew that prohibition could only be enacted if a way was found to replace the 40% of Federal revenue that was raised by excise taxes on alcohol) the original tax was 7% on incomes above $500,000. Since $5 a day was a very good wage then, the top .001% paid 100% of the income tax.

JTM March 11, 2014 at 11:09 am

peter n – Do you filter out the conservative lies also? There are plenty of them too, like saying so many don’t pay any taxes. There may be a good portion who don’t pay federal income taxes, but they still pay plenty of other taxes.

While the 1% may pay a larger portion of taxes collected, they also have the bulk of earnings and an even greater share of overall wealth, both have continued to grow while the rest of us stagnate.

Peter March 10, 2014 at 10:59 am

Wow – I would love to eliminate all income tax below $1 million. That would seriously eat into the budget though. Of course, if welfare was gone there would be an offset there.

My additions to this:

1. Eliminate tax exempt status for religious organizations.
2. Increase the allowable charitable deductions.
3. Legalize marijuana at the Federal level and tax it. Follow the Colorado model using a percentage of the proceeds to fund awareness and treatment.
4. Eliminate the estate tax.
5. Legalize online gambling and tax it severely. Again, use portion of proceeds to handle education and treatment.
6. Have the government control our prison system rather than it being privatized. Establish treatment centers in lieu of prison for drug users. Release all drug possession offenders from prison.
7. Make a balanced budget a requirement. (or at least close to it)

Most importantly, something has to be done with our election system. Campaign finance reform is at the top of the list. I also would do away with the two party system completely. It is just too hard for a dissenting voice to be heard. Both parties subscribe to the same big-government spending nonsense, international meddling policies and general BS that is driving most of us crazy on here. They tell slightly tilted versions of the same story. People laugh when they hear about elections in the Middle Eastern nations or North Korea where there is only one name on the ballot. Well, we have the same thing here! Only difference is there are two names on the ballot. Almost impossible to get the third name in the game – especially since Perot crashed the party and they changed all the rules for entry. If we want anything to change, it has to start here before we even tackle the stuff on any of our lists.

Reply

Normal Joe March 10, 2014 at 2:01 pm

Since you have opened the Pandora’s Box of Marijuana, why stop there. The war on drugs is an utter failure and responsible for creating violent criminals the same way the Eighteenth Amendment devastated this country. More than half of all incarcerations are the result of non-violent drug charges egregiously targeting minorities creating generations of second class citizens. It has been estimated that the country has, in effect, wasted a Trillion dollars since it’s inception in 1971 in lost potential revenue as well as law enforcement, judicial processing, and prison costs. This should be a no-brainer, but will face extraordinary resistance from the legions of jobs it has created at taxpayer expense.

I agree that all investment income should be taxed as ordinary income. But, long term capital gains is a troubling obstacle. If this is done, I am not convinced that the estate tax yields the critical mass of revenue, but I am open to the presentation of more information to evaluate my perspective.

Gambling is definitely another potential revenue producer.

I have reservations about a balanced budget requirement. That could tie the government’s hands when faced with extraordinary circumstances. I do recognize that we need a mechanism that prevents politicians from “giving away the farm” the minute surpluses show up in the revenue stream.

Reply

JB March 10, 2014 at 2:21 pm

Pot doesn’t make people as violent or as crazy as other hard drugs. Booze has killed more than pot ever has and it is taxed and regulated. Let’s start with pot and if people want to have a movement for cocaine and heroine, let the studies show it is OK. I am fine with pot and booze being legal.

Reply

Normal Joe March 10, 2014 at 3:10 pm

When comparing the ill effects of any drug and drug policy, we must evaluate all negative aspects of each side. All of the violent criminal activity in Central and South America is directly related to the USA requiring USA Drug Laws as a precondition for financial aid. Our failed war is killing thousands outside the US borders, and should be addressed.

Peter March 10, 2014 at 7:48 pm

Agree with both of you. Let’s just start the ball rolling with open minds. Anything has to be better than leading the world in imprisonment, fueling the violence and drug cartels in Mexico, and all the money wasted on the “war”.

Plus a lot of this talk is about the “wealthy paying their fair share”. How about the people in the drug world pay their fair share too?

Lance March 11, 2014 at 10:58 am

One of the reasons given for ending prohibition was that it would reduce the gang violence like the St. Valentines massacre where members of the Capone Beer cartel killed 7 members of the Malone beer cartel. However, didn’t I just here of a assacre where members of the Budweiser Cartel killed members of the Coors Beer cartel? See legalization doesn’t reduce gang violence.

Ken March 10, 2014 at 5:55 am

Here’s another line of thought to ponder, although I picture it being somewhat like throwing raw meat to a pack of wild dogs……

If the tax code is so unconscionably preferential towards the 1%, then who is it who caused the tax code to be this way? Wasn’t it government itself which created this — and in particular politicians with questionable ethics who allowed themselves to be bought by corporations, or by members of the 1% ? And if that’s the case, why then do we think that government policiticians will be honorable enough to correct the situation? They’re the ones who crafted the tax laws in the first place.

And before we start with the “it’s all the fault of small government Republicans” blame game, let’s remember that during 2009 and 2010 Democrats had majorities in the House and the Senate, plus they occupied the White House. They could have overhauled the tax code pretty easily, relatively speaking.

OK. Let the games begin……

Reply

Man-of-Reason March 10, 2014 at 7:06 pm

During those two years, the political capital was spent on the Affordable Care Act instead. There was no way the Democrats could tackle a return to pre-Reagan tax rates even if they really wanted to. Perhaps with more time… but that’s just speculation.

Reply

Normal Joe March 11, 2014 at 6:51 am

I couldn’t reply to your comment regarding taxes, so I’ll take that opportunity here. Ken wrote previously:

“For clarity, as of 2010 the top 1% did not earn “70% of the wealth”. They earned 18.9% of the wealth, while paying 37.4% of the federal income tax burden.”

Unfortunately, these numbers represent AGI as reported in tax filings. This is not an accurate representation of true income because it is the product of extensive adjustments to Gross Income. Just an FYI.

Reply

Ken March 11, 2014 at 7:02 am

Normal Joe — I think my comment was a much fairer representation of reality than JC’s previous comment to the efffect that 1% pay 40% of the taxes because they earn 70% of the wealth. My point of course was that the 1% do not earn 70% of the wealth. As represented by AGI, they earn 18.9% of the wealth, upon which they then pay 37.4% of the tax burden. If you have charts to make a fairer representation than AGI, I’d be interested.

Reply

Aspiekid March 10, 2014 at 6:11 am

Nothing will change much to the benefit of all Americans until we eliminate the influence of money on elections and legislation. Unless we limit political contributions (including lobbying), and work to provide equal public discourse over public airwaves and internet, we will be fruitlessly arguing these same issues and Americans will be just as polarized, talking past one another 50 years hence. Money and the political demigods it buys divide us too greatly and weakens our country.

Reply

JB March 10, 2014 at 7:43 am

The poor have lobbyists. Why do you think they want the Minimum Wage raised?

Reply

Aspiekid March 10, 2014 at 8:04 am

I didn’t say to do away with lobbyists, but to limit the money individuals can contribute to them. Since more than half of all our legislators now are hired by or form such firms once out of office, and are paid in the millions for their connections, there is little chance they will vote to restrict such money. Therefore, the first thing to do is to forbid anyone holding elective office from taking such a job.

Reply

JB March 10, 2014 at 11:20 am

There is a limit in place already. You need to get rid of the Super PACs that basically have no limits.

Reply

Aspiekid March 10, 2014 at 12:40 pm

The wealthy can circumvent those limits now any time they want using corporations, shell companies, trusts, foundations, and Super Pacs. There are no limits on lobbyists and the influence they peddle. All politicians should be required to publicly list the minutes spent talking to anyone about any issue before, or which may come before, the respective legislative body.

So long as there are no limits, just in Russia like with Vladimir Putin, all media and information will be overwhelmingly controlled by wealthy political activists (the top of the 1%). That’s not a democracy where each person deserves a equal vote and equal voice.

JB March 10, 2014 at 12:42 pm

I am going to go out on a limb and say most rich are WAY too lazy to do all that work just to give some money.

Mancrunch March 11, 2014 at 1:46 pm

The rich are hardly lazy when it comes to investing a few hundred million in politics which may pay off hundreds of billions through favorable legislation. Adelson, Soros, and the Kochs are prime examples.

JB March 10, 2014 at 11:22 am

Or just cap the amount of money a candidate can spend. All extra money goes to pay off the National Debt. Then you have an even playing field.

Reply

Normal Joe March 11, 2014 at 1:21 pm

In response to:
“JB March 10, 2014 at 12:42 pm
I am going to go out on a limb and say most rich are WAY too lazy to do all that work just to give some money.”

Methinks that throws the justification for them to be entitled to earn more money out the window.

Reply

alan March 10, 2014 at 11:48 am

I am a chiropractor in nyc and for the past 20 years, I have made over 400K. My best year was 1.2M. I pay taxes, I create jobs and I get hurting people well. Someone please tell me why I am the enemy of the current administration.

Reply

Aspiekid March 10, 2014 at 12:28 pm

Who said that the administration said that you are the “enemy”? Rush Limbaugh? Fox News? This administration never said such a thing. The far right talking heads say those things to make you feel unjustly victimized and piss you off. Anger gets people to the polls to vote for their candidates. Don’t let them manipulate Alan.

Reply

JTM March 10, 2014 at 4:05 pm

alan – aspiekid is quite right! Except he only leans on the Right, when many on the left are just as much at fault. It’s these fools on the “news” channels(from BOTH sides) that say the classes are at war with each other. They benefit by getting you riled up and looking to fight the other side. It makes you lose your senses.

The reality is, BOTH parties go us into this mess, we are all in this together. It is going to take compromise and working together to get us out of our mess. The rich don’t all despise the poor, nor the poor the rich. There are rich people through luck and genetics as much as there are poor for the same. There are also hard workers at all levels of income. We all share more than we don’t. We all need to start working together and expecting the same from our leadership.

For one thing, we need to start voting for the best candidate, and stop voting partyline. Anyone who says their party has all the answers and can do no wrong while the other party is full of fools, is totally delusional!

Reply

Peter March 10, 2014 at 7:45 pm

Uh…. http://youtu.be/JMSkXM9PIHc

There is no shortage of divisive rhetoric from this president “attacking” the wealthy saying they aren’t paying their fair share.

Reply

Normal Joe March 11, 2014 at 7:05 am

How can anyone affect anything worthwhile when so many focus on what they perceive as divisive? This is a throwaway epithet that fails to engender any confidence and is used ad nauseum. From time to time the concept of a “Flat Tax” filters it’s way to the top of the debate, but is quickly relegated to the nether-land of ignored concepts. Why is this?

Maybe because of it’s true egalitarian consequences whereby anyone making $20,000 or $20,000,000 will pay the same percentage. There is always push back by the high earners. Please explain why this is considered justified other than one group thinking they are more important than others? It can be argued that any tax philosophy to be successful must be viewed as unjust by all parties. No one should be happy.

Reply

Peter N March 11, 2014 at 9:56 am

I would be happy with a flat tax. I wouldn’t need to pay someone to do my taxes for me. The 20% rate would be OK to since the rate I pay is much more even though I have a lot of deductions.

Those that don’t pay taxes do not have any stake in the economy or the country. They are leaches and should not be allowed to vote. This may seem harsh but they don’t feel consequences of their decisions. A flat tax would solve this problem.

Aspiekid March 11, 2014 at 10:49 am

You still haven’t grasped the concept that even the poor pay taxes, especially on the state and local level that are very regressive. All a flat tax would do is to eliminate any progressive push back on the other taxes and cause us all to pay a greater percentage in taxes as our income decrease. Great for the rich. Not so for the poor and middle class.

Peter March 11, 2014 at 1:25 pm

That is true…the poor do still pay payroll taxes. Most don’t pay income taxes and a majority don’t pay property taxes either. But they do pay payroll taxes.

I’ll say it once again though to those of you fighting for “progressive taxation” …. THIS is what we HAVE! I pay an effective tax rate now of about 35% while 15 years ago when I was making barely enough to survive (and tax rates were higher then even), I remember an effective tax rate of 4%. That is the definition of progressive. We HAVE THAT already.

JB March 11, 2014 at 1:28 pm

theoretically, you get back what you put into SS if you live long enough. Some people get more than they put in. That is why we aren’t arguing about SS except for the limit to where it goes away. Everyone gets capped at X amount of SS. So yes, when you go over 120K SS stops, but you don’t more than the maximum allowed.

JTM March 11, 2014 at 8:40 am

peter – And …. your point? There is no shortage of divisive rhetoric from those on the Right either! BOTH sides point their finger at the other for trying to divide us up, while doing the same exact thing!

Reply

Peter March 11, 2014 at 1:22 pm

You assume because I show the President of the United States using divisive language that I’m on the right??? Well, you’d be wrong.

I just posted that clip as a response to Aspiekid’s assertion that “this administration” never engaged in any rhetoric that would be divisive or to make the wealthy the “enemy”. Took me about 2.5 seconds on YouTube to find a clip of Obama doing that very thing.

Mancrunch March 11, 2014 at 2:01 pm

Peter, Why does the president’s belief that the wealthy should pay a larger share of income taxes mean that he’s making you the enemy or that his language is necessarily divisive? Warren Buffet believes the same thing as do many wealthy individuals. You see they once paid a great deal more.

The issue is divided along the lines of those who think it’s fair and those who don’t, regardless of wealth. Buffet, who’s a great deal better off than anyone here, obviously doesn’t feel he’s being made the enemy, but instead, agrees that the present system is unfair. Most people who are wealthy had nothing to do with the present system and no one’s coming for the 1% with pitch forks and torches. Chill.

Peter March 11, 2014 at 2:50 pm

Buffett doesn’t think the tax laws are unfair to the 1% though. He thinks they are unfair to the .01%, which is a different debate. Buffett has never been a proponent of raising income taxes on the people making $350k. Plus, when Buffett talks about income inequality, he isn’t talking in dramatic rhetoric and using words like fair. He is approaching it with a reasonable, thought out mindset which I appreciate quite a bit.

The big difference between the two is Buffett is just calling it like he sees it. Obama is trying to win favor, votes, popularity, etc. Hence the rhetoric.

Man-of-Reason March 11, 2014 at 4:52 pm

I agree that the tax burden of the .01% should be greater than the 1%. You pay 35% while they pay 14%. That is NOT just or fair by any standard held by a vast majority of Americans.

JC March 11, 2014 at 8:12 am

First off, I never said that the 1% earned 70% I said they had 70% of the money, they have it all tied up making more and more money and not trickling it down.

I heard on TV this morning the same old rhetoric straight from Gov. Rubios mouth that 10.00 or even 15.00 an hour minimum wage won’t help. He said that by cutting taxes on on companies that invest is the only way to fix things.

I’m tired of this same old bullshit. The more invested the richer the rich get. If trickle down policy worked, there would be plenty for everyone to go around. In the years since Regan (or whoever) cut the Capital gains tax to 14% just proves it all the trickle down went into only the riches bank accounts it hasn’t spurred any benefit to the middle and lower classes. Which is why left is mad in the first place. We have over compensated by raising taxes on earned income which has destroyed the middle class.
The problems we face are are our own fault. Only by voting will we get things fixed. And only by acting as one nation and not 2 separate factions at war with each other will we start to repair the damage done.
Ask 1 question to anyone seeking election. Are you in favor of election reform. If they answer ANYTHING OTHER THAN YES. Tell them to take a hike. The only way to get the right people into office and throw out the trash is to vote it.

Reply

JTM March 11, 2014 at 8:32 am

JC – Yes, yes, yes! Trickle-down does not work! If you want a sure way to get people to invest, give them customers! The current tax rates are not even close to usurious or to the point of discouraging investment. If you earn your income (or the bulk of it) by investing, then you should be paying a rate equal to the rest of us.

Reply

JB March 11, 2014 at 9:02 am

Large companies started as small companies. How can you say trickle down doesn’t work? Money reinvested into a company helps it grow. Most of the uber rich are paid low but make up the rest of the compensation in stock options. Right or wrong, it helps them keep the company growing so their stock price rises. are you happier with a CEO making $150K but has 15,000,000 shares of stock? Buffet could work for free and sell 1 share a month and be just fine.

Reply

Aspiekid March 11, 2014 at 9:19 am

That’s right JB. Trickle down does work very well… for the 1%. If “the proof of the pudding is in the tasting” then let’s see what it tastes like to the 99%. The efficiency of the American worker has increased 95% over the last 35 years. He produces almost twice what he once did. Yet, over the same period, his income in real dollar terms has increased only 8% (decreasing 8% in the last 10 years). The rest went into the pockets of the 1%. The 1% now have 4 times what they once did on average and crow about how lucky the rest of us are for having jobs that they provide. That’s trickle down economics (aka Reaganomics, aka Voodoo economics).

The bullshit we all hear about “a rising tide floats all boats”, is just that, and it offends Americans’ sense of justice.

Reply

Peter March 11, 2014 at 1:26 pm

Yet we have the richest 99% in the entire world.

Man-of-Reason March 11, 2014 at 1:33 pm

No we don’t Peter. There are a number of countries where the divide between the 1% and the 99% are nowhere near as great as the U.S. and yet have a higher per capita income.

Peter March 11, 2014 at 2:11 pm

The divide might be greater here, but the poor still live better than in those countries you refer to. Would love to see this list… the US was 7th in the world in per capita income (2012) behind Qatar, Luxembourg, Singapore, Norway, Brunei and Hong Kong. Two of these countries, Brunei and Luxembourg have less than 500,000 people. The biggest is Hong Kong with 7 million people. The US has 400 million people.

And the GINI coefficient which measures income inequality is about the same as in Singapore and Qatar, lower than it is in Hong Kong. Only Norway has a higher per capita income with less income inequality.

Sorry but you are wrong on this one.

Man-of-Reason March 11, 2014 at 2:15 pm

Then I stand corrected until I can find differently. Well done.

Man-of-Reason March 11, 2014 at 2:49 pm

Okay Peter, Let me quote from the Global Wealth Data Book.
The median net worth in the United States is $38,786 which ranks it 26th in the world. The median is of course, the person exactly in the middle with an equal number of people on either side. That’s the true standard of middle class “wealth” accumulation, and we’ve been falling compared to other nations for three or four decades.

1. Australia $195K
2. Luxembourg $154K
3. Japan $141K
4. Italy $124K
5. Belgium $120K
6. Great Briton $115K
7. Iceland $96K
8. Singapore $96K
9. Switzerland $87K
10. Austria $82K
11. Canada $82K
12. France $81K
13. Norway $79K
14. Finland $73K
15. New Zealand $63K
16. Netherlands $62K
17. Ireland $61K
18. Qatar $57K
19. Spain $53K
20. UAE $48K
21. Taiwan $45K
22. Germany $42K
23. Sweden $41K
24. Cyprus $41K
25. Kuwait $40K
26. United States $39K

Peter March 11, 2014 at 2:55 pm

MOR – well done as well. Haha….

I think the point in your last post that bears notice is that we have been falling. That’s what the concern is. Not that we are becoming some third-world nation or that our poor live in substandard conditions relative to the rest of the world. Even so, 26th in the world in median net worth is pretty darn good.

Interesting Japan is 2nd. Due to their massive economic fallout decades ago, their public – even the poor – have been saving money like crazy. And 30-40 years later, they have the 2nd highest median net worth. Go figure! Saving instead of consuming actually helps people on an individual level. Not exactly the American way.

I do still maintain that there are more than enough stats I could roll out – even beyond the anecdotal evidence – that our poor and middle class have it really, really good in America relative to the rest of the world. Of course, that is no excuse for apathy.

JTM March 11, 2014 at 9:57 am

JB – I fail to see your point. Why wouldn’t companies continue to pay executives in stock options instead of salary? How is that even part of trickle-down?

Trickle-down says that keeping more money in the hands of the wealthy with get them to invest and create jobs. But, without people with the ability to buy, there are no companies growing. Customers are the basis of our economy and any successful business. Why would you invest to build a million more fidgets if there are only 100 customers with the ability to pay? Why wouldn’t you invest to build a million more if you have 2 million customers that have the ability to buy?

In order to grow the economy, we need to keep money in the hands of customers. They will buy, businesses will invest in workers and equipment to meet demand, and the cycle will continue and multiply the money in the system raising the wealth of all. Put into the hands of the wealthy only, they will invest where they see the most benefit for themselves. If they don’t see customers locally, they can decide to sit on the money (as many companies are doing now) or invest in places outside the US, neither of which helps us grow our economy or reduce our unemployment. Trickle-down raises the boats of the wealthy, but trickle-up raises everyone’s. Proven throughout history, the wealthy will always “get theirs”.

Reply

JB March 11, 2014 at 12:49 pm

It doesn’t matter how much you pay someone if they aren’t buying the product a company is producing. Not every person buys every item in the economy. Rolls Royce pays their workers well, but have a limited supply and demand for the cars. Apple has to produce millions of phones and it is their choice to use Chinese labor at 1/3 price and at some point if a better phone comes along, Apple won’t be making those phones. Look at Blackberry. Those phones will be gone soon. Again, if you think a CEO is going to take less money in order to pay labor more, you are barking up the wrong tree. They get paid based on many things. Just because Apple has 200B in cash doesn’t mean they have to double labor wages that will skew the rest of the market. You salary is based on your skills and worth to the company. A great salesman should make more money than a poor salesman. CEOs get fired when the companies don’t perform, and like Pro Sports teams, they think paying more gets better talent, but it doesn’t. But it isn’t up to you and me what they are paid. They still pay more in Federal Taxes, Sales Taxes and Property Taxes than the 75% of the rest of people. They have 2nd homes, go on more vacations and probably have large staffs of people running the house. That is direct trickle down economics. If I fire my maid, I have made a direct impact on her life. But guess what, she isn’t worth paying $500 to clean my house. She is willing to do the work I am paying her.

JTM March 11, 2014 at 1:18 pm

JB – That is all nice and dandy, but I don’t know why you keep thinking that people are insisting the CEOs should take a pay cut and give it to their employees.

My point is no matter what your business, big or small, high priced and fancy or cheap and simple, you need customers that have the ability to pay for it. These customers drive the economy and profits to all companies big and small. Sure, you may trickle-down a few dollars here and there, but you are also more likely to put money aside into savings account or invest outside the US. The multitudes have the buying power to change the overall economy, not the wealthy.

A persons is also not just a commodity. Just because there are people willing to take a job, any job, even if it doesn’t pay a livable wage, doesn’t mean they are worthless and deserving of only that. People that want to treat others like that, as a commodity, are truly sickening.

JB March 11, 2014 at 1:26 pm

The left complains the CEO makes 400x more than the lowest paid worker. Those are the people complaining about CEO pay.

Mancrunch March 11, 2014 at 2:11 pm

You misunderstand JB. The “left” along with many on the right are pointing to CEO pay as an example of how the top has increased its wealth during a time of great productivity increase, while the middle and bottom barely have any increase at all or have even regressed. They are saying that something is wrong with this picture. They are very concerned about growing inequity, not “complaining” about CEOs.

JTM March 11, 2014 at 2:35 pm

JB – And therein lies your misunderstanding. It’s really, truly, not the Left vs the Right. There are many in either group that will go along with or against you.

If you want to keep going down that line of thought, there is no hope a any real discussion with a positive outcome as you have already decided what is what.

Personally, I feel this bitter partisanship is the biggest reason we are where we are as a country. The only way out is to start working together towards a common good.

Peter N March 11, 2014 at 10:17 am

Big companies also hire smaller companies to do things efficiently that the big companies can not.

Reply

Peter March 11, 2014 at 1:29 pm

Great back and forth between you guys (JTM and JB). Think I agree with both of you. But the point JB made is right. There are plenty of people complaining about CEO pay. Or saying the CEO has a duty to raise the wages of his/her employees. Or saying they should pay 70% in income tax. There is plenty of that going around.

Reply

Normal Joe March 11, 2014 at 10:15 pm

Only JB may be stretching the facts a little. The fact is that currently CEO pay is 380 times the income of the median worker, not the lowest paid. Subtle difference to some, not so much to others. It’s an observation, not an epithet. We can not afford to be afraid of the truth.

Lance March 11, 2014 at 9:10 am

A hundred years ago Keynes predicted the “end of economics” based on what he saw as the pace of technological change and productivity, he thought that by now most people (probably referring only to what we now call the developed countries like the USA and UK) would be able to live very comfortably only working about 15 hours per week. What Keynes did not foresee was that the rich would use their political power and media ownership to shift the burden of taxes away from the rich and onto the middle class. Thus, robbing the middle class of their purchasing power and vastly reducing the efficiency of the economy with periodic overinvestment cycles.

Reply

Peter March 11, 2014 at 1:33 pm

How is the burden of taxes on the middle class? This makes no sense. Even when you wrap in the payroll tax, etc. the middle tax pays a lower percentage of their wages in tax than the 1%. This isn’t even debatable. They also pay a small percentage of the overall tax burden, which is largely carried by the 1%. This is rhetoric….

The problem with the middle class in my mind is two things:

1) The lack of unskilled labor jobs as our economy changes from an industrial, manufacturing age to an information technology age.

2) The fear of corporations to free up their capital to expand or hire people, largely due to the uncertainty about our overall economy and nonsense coming from Washington (tax hikes, ACA, etc.) that creates so much uncertainty for a business going forward.

Reply

JB March 11, 2014 at 1:46 pm

Derek Jeter pays more in Taxes than 100 people in the middle class. Can he find deductions by having a large house and donating some money? Yes, but he will still pay more in taxes than the middle class. He is taxed at 39.4% + the 3.8% tax on investments and passive income. He pays more in property taxes and sales taxes. Now, if he lived like a middle class person he could live in a $300K house and shop at Costco and not go out to dinner at the high end restaurants, but that is the choices of having the disposable income. Jeter is arguably one of the best short stops in the game. The Yankees think he is worth $20M and the guy coming up in the minors hopes to have those talents. Are athletes overpaid? One the most part, probably yes. Russel Wilson is “only” making $500K, but his career is much shorter than most and he will get his payday soon.

Both Rich and Poor have declared bankruptcy. Making $1,000,000 and spending $1,100,00 might make you an idiot, but most of those expenses are controllable. I agree, the person making $30K spends more money on the necessities, but no amount of food stamps or section 8 housing will do anything unless they decide to figure out how to get a better education by increasing their skills. Not everyone is cut out to own a business, not everyone is cut out to manage. Plenty of people are happy being a worker bee and letting the boss have all the stress.
We all pay for athletes making more in ticket prices and beer prices and cable prices. If you don’t watch sports, you aren’t helping pay for them. if you don’t rent a car, you aren’t helping pay for the stadiums.

FYI, on a different topic of industry, there are now more than 2,500 breweries in America now. They are all providing jobs. Someone had to risk money to start the brewery. The bigger the brewery gets the more people is needed. At some point cash is needed to be reinvested and held for expansion or getting through the bad times. Microsoft, Google and Apple are the far, far outliers of companies with hoards of cash. Just go out and support your local brewery and not the dreck that Budweiser and Miller Lite puts out. We are all better than that.

Reply

Normal Joe March 11, 2014 at 4:45 pm

Let’s break this down in real facts instead of throwing generalities in the air as if they are facts. First, there are 114,800,000 households in the United States as of the 2010 Census. The top 1% is only 1,148,000 households. This correlates with the tax information link provided by Ken that noted 1,350,335 tax returns. Most information is provided in what is called quintiles, or 1/5 slices of the total households. The total net worth of all Americans is $54 Trillion. The top 1% hold 40% of that total. In 1976 the 1% took home 9% of the nation’s income. By 2012 that same group took home 24%. The top 1% own 50% of the country’s stocks, bonds, and mutual funds. The bottom 50% only own .5%. The average American worker must work a whole month to make as much as the dreaded CEO does in one hour. The claims that the middle class is shouldering the burden of this wealth inequality is not based on how much they make, but more on how many of them are making it. The bottom 15% are in the poverty range without savings or assets to rely on. The middle class, the middle 40%, 45,920,000 strong, are struggling away without anything to show for it. If you make more than $100,000 you are in the top 20%, not the middle class.
http://en.wikipedia.org/wiki/File:Distribution_of_Annual_Household_Income_in_the_United_States_2012.png

The source of this inequity is founded directly in the failure of management to share reasonably with the working class the efficiencies that many worked long and hard to enable their companies to excel, and the offloading of the tax burden on the top 1% driving us deeper into debt.
http://stateofworkingamerica.org/charts/productivity-and-real-median-family-income-growth-1947-2009/

Reply

JB March 12, 2014 at 9:09 am

Not everyone in the middle class are struggling. Plenty of people in the middle class pay off houses and save for retirement. Most people are in the middle class. there will always be a middle class. Even if the median income goes up, the gov’t will still just move the line higher.

Man-of-Reason March 12, 2014 at 8:20 am

“2) The fear of corporations to free up their capital to expand or hire people, largely due to the uncertainty about our overall economy and nonsense coming from Washington (tax hikes, ACA, etc.) that creates so much uncertainty for a business going forward.”

The uncertainty to expand isn’t so much because of “… nonsense coming from Washington…” but rather because the economy, which is 70% driven by the consumers, isn’t strong enough to support more production or increases in services. The consumers do not have the resources to spend more. The “nonsense” argument is political noise and is just that, nonsense.

Reply

Normal Joe March 12, 2014 at 10:38 am

JB, I must respectfully disagree. If the “middle class” is not struggling we would not be in this extended recession (seeing as some people are unable to classify our economic doldrums as a depression). Since 1970 there have been four recessions, but since 1980 each subsequent recession has taken a larger toll on the aggregate demand of the middle class that is historically the engine that fuels the recovery.

This continuing decrease in aggregate demand is the product of the middle class’s erosion of disposable income. Without realizing the gains in productivity and the cost of basic necessities, housing, food, and healthcare continues to rise, less is available to fund leisure activities. This is what depresses the economy resulting in the eventual extensions of the life of the recessions. This is arguably the direct result of the wealth redistribution of the past 40 years.

I will agree that the uncertainty from Washington because of our dysfunctional government (all parties included) just kicking the can down the road and pretending that doing nothing is leadership introduces uncertainty not only at home, but worldwide. But it is not tax hikes or getting people covered by health insurance that is doing it. That is delusional hogwash used by incompetent politicians putting lipstick on a pig.

http://www.economist.com/blogs/dailychart/2011/07/american-recessions-and-recoveries

http://www.frbatlanta.org/cenfis/pubscf/nftv_1110.cfm

Peter March 12, 2014 at 10:57 am

There is some truth in what you are saying, MOR – but also truth in what I am saying as well. In spite of what you are saying about consumers not having the resources, consumer spending rises each year. In fact, it has risen every single year in most of our lifetimes except for the 08-09 slowdown. We are actually now at record highs for consumer spending.

That consumers don’t have the resources to spend more is nonsense. For decades, there has been very little that can stop the American consumer from spending.

Peter N March 11, 2014 at 10:00 am

The capital gains tax was never as low as 14%. You are repeating liberal propaganda spread by Democrats against Romney. Romney paid less because he had deductions for donating to charity. Romney gave away many times more than Obama did but some Romney is the ogre?

Reply

JTM March 11, 2014 at 10:14 am

peter – Romney is also required to tithe (10%) to his church, which makes up the bulk of this charitable giving. So, I wouldn’t put so much importance behind his charitable giving. Besides, is he really giving 10% of his earnings? He, and others like him, can manipulate (within reason) their income from year to year to show what they want by choosing which investments to sell and when.

Who should be more commended, those who give what is required by their church and can easily afford it, or those who see someone n need and do whatever they can do even if it means they suffer a bit themselves?

While I agree many wealthy are very generous, it is easy when you have the money and just need to write a check and you get a nice payback at tax time.

Reply

Peter March 11, 2014 at 1:37 pm

Ouch. You are gonna get some pushback from this. I am actually fairly anti-religion as many who have seen my posts know. But nonetheless, who are you to judge the merits of what charitable giving Romney does. While I don’t agree with a lot of Romney’s politics, I think you’d find a hard time finding someone who knows him who doesn’t say he is a very kind and generous man.

You don’t have to suffer yourself to be kind and generous to another. It’s insulting to cheapen someone’s good deeds and charity by saying “it’s easy for them”. You know what’s even easier? Sitting on my butt and keeping my money in my bank account.

It always riles me on here how making complete fun of the wealthy is totally socially permissible, but when people do the same to the poor it is just “mean”. I know you don’t intend it to – but it just comes off as petty envy.

Reply

JTM March 11, 2014 at 1:56 pm

peter – The thing is, your post seemed to extol Romney’s virtue because of his charitable giving. When, in fact, it’s not that charitable when it mostly goes to and is required by his religious sect. If he were to give beyond the required 10% and include other charities, I would consider that charity, but not a mandatory tithe.

Peter March 11, 2014 at 2:14 pm

Wasn’t my post. (Another Peter) I still don’t agree with you at all – didn’t think he was extolling Romney’s virtue at all – but maybe I read it differently than you.

I will say that there is nothing mandatory about being Mormon. He can choose to not be a Mormon. But don’t get me wrong… I don’t think anyone should get a tax deduction for giving to ANY religious organization. And I think Christianity is just as kooky as Scientology, Mormonism or Muslim.

JTM March 11, 2014 at 2:42 pm

peter – Apologies for confusing you with the other.

The part where I infer him extolling Romney is “Romney gave away many times more than Obama did but some Romney is the ogre?”.

And, I agree, tax deductions for religious groups should be reconsidered. But, as far as choosing not to be a Mormon, sure he could, but that makes it a bit oversimplified.

As an aside, I would like to see how he accounts to his sect for tithing only on his reported income. His real income is much greater, it just hasn’t been realized for tax purposes yet.

Peter March 11, 2014 at 2:57 pm

Well, presumably the money he gives to the Mormon church goes to the greater good – helping people in need both here and around the world. Whether that is actually true or not is an argument for another forum.

JTM March 11, 2014 at 3:20 pm

Presumptions aside, it is a requirement for him in hopes of entering the kingdom of God, not something necessarily virtuous or altruistic. So I don’t see how it can be viewed as somehow setting apart or making him any better than others such as the Obama’s, which the original post by ‘Peter N’ seemed to be pointing to.

JC March 11, 2014 at 8:23 am
Normal Joe March 11, 2014 at 1:43 pm

Just a point of information on some of the rhetoric in that video. The president is not responsible for initiating budgets. The president sends his recommendations on to Congress where the House of Representatives has the responsibility of initiating the legislation that starts the legal adoption process. After the House approves a budget, it is sent to the Senate for their recommendations. The Senate then passes their version of the budget. This is now where the process has become dysfunctional, both budget bills are supposed to go to Congressional conference committees where they work out the differences between the two bills. The result is supposed to be a bill that both houses can vote and approve. Afterwards, the President has the opportunity to take line item vetoes which congress can then pass with 2/3 majority making it veto proof. The president is then responsible for administering the approved budget. If Congress passes a budget that spends more than what is reasonably expected to be received in revenues, the budget is then in a deficit and requires any actions necessary to fund that budget completely.

Reply

Peter March 11, 2014 at 1:55 pm

Wrong. Then what is this exactly? http://www.whitehouse.gov/omb/budget

Reply

Normal Joe March 11, 2014 at 4:04 pm

The President’s proposal with supporting documentation for the Congress to use in the preparation of the Congressional Budget Resolution.
http://uspolitics.about.com/od/thefederalbudget/a/budget_process.htm

Reply

Ken March 12, 2014 at 10:36 am

Here’s another question for everyone…. What effect, if any, do you think the Information Age has had on the disparity between rich and poor? Is it merely a coincidence that the Information Age happens to coincide with the increasing disparity of wealth we’ve seen over the last thrity years? We can all name a lot of Info-based CEOs who are among the wealthiest people on earth — Zuckerberg, the late Steve Jobs, Gates, among them. There have been many others who have become very wealthy, and their names are not easily recognizedby most of us, such as the people who got in on the ground floor at Microsoft and retired in their 30s.

Reply

Normal Joe March 12, 2014 at 10:47 am

This may well be the result of too much money looking for investments and the unintended result is the elevation of these people to the top 10 and 1 % instead of the other way around. The overwhelming correlation and probable cause of this economy is the imposition of Reagan’s Supply Side Economics that deserves to be put in the dustbin of history right alongside his Star wars defense system fantasy.

Reply

Peter March 12, 2014 at 10:50 am

I think it has a ton to do with it. First of all, like you mentioned, we created a whole slew of uber-wealthy people from the info-tech world in the last 20 years. In a way, it parallels “the men who built America” like Carnegie and Rockefeller in that people like Gates, Zuckerberg, Jobs, Ellison, Allen, etc. have “built the new backbone of America”.

The second reason as I have stated on here before is that unlike the Rockefeller days, this amazing growth period in our economy has not created eons and eons of unskilled labor jobs. Sure, there are tons of jobs in this industry, but they do require a certain degree of expertise, education and ability. The manual labor jobs of the Rockefeller days like making steel or laying down railroad ties just don’t exist as much in the information age as they did then.

So don’t you think this contributes to wealth inequality significantly? Creation of millionaires and billionaires who build the infrastructure, but without creating opportunity for thousands of lower and middle class laborers.

Frankly, I think this has much more to do with the inequality than anything else discussed in here – including Democrats or Republicans, tax laws, lobbyists, or whatever….

Reply

Peter March 12, 2014 at 11:01 am

….but I’m sure many will continue to try and blame it on Obama. Or Reagan. Or greedy CEOs. Or something “unfair” that they can vilify. That certainly is more fun. :)

Reply

Peter March 12, 2014 at 11:04 am

Oh… and add to this the jobs that technology advancement has taken AWAY. There is more of a divide than ever between skilled labor and unskilled labor.

Reply

JB March 12, 2014 at 11:21 am

Many people never saw their stock options make any money. Tons of people in Silicon Valley were paper millionaires. Then the tech bubble blew up and they were back to normal.

Reply

JB March 12, 2014 at 11:27 am

Gates and Ellison created a product. Facebook won’t last forever. But Zuckerburg cashed in at the right time and has 500M people using the product. Why does every industry have to help the unskilled and poor? Many industries are software and other soft industries. BTW, there is a ton of manufacturing going on in Texas related to the oil industry and there are about to be 2,000 jobs for blue collar working in East Houston building some new refineries. Those on welfare and are unskilled working in fast food restaurants won’t be able to take advantage of these jobs. Unions are encouraging members to leave other states and come to Texas for these jobs.

Reply

Peter March 12, 2014 at 11:58 am

JB – It doesn’t have to help them. It is what it is. And yes it’s not like there aren’t any unskilled labor jobs available – there are just fewer of them. The boom in the information tech world has largely been at the top and the bottom hasn’t come with them. And sure, even at the top there were winners and losers (like you mentioned those that didn’t cash in at right time).

Reply

Man-of-Reason March 13, 2014 at 11:12 am

Like Rockefeller, today’s tech wonderkids and their wealth are a product, not only of higher technical skills, but also of historically low tax rates, especially on dividends and capital gains. This allows the gain in wealth to be even more meteoric. I believe there are a number of reasons for the accelerating of wealth disparities, with lowered taxes and supply-side economics being only a couple, although significant.

The weakening of labor laws and unions over the past 35 years means cheaper labor and greater profit. Also, the fact that technology has outpaced worker education and training has created an unemployment gap that drives down all other wages also. In this cycle, the wealthy tech guys we all admire have actually decreased employment overall. Yes, their companies are growing, but at the expense of many other companies’ employees. So many jobs have been replaced by computers and robots that where it once took many workers to produce a product or service, it now takes a fraction of that. Most importantly, the far greater ability of the wealthy now to influence legislation favorable to their companies and subsequent bottom lines is extremely significant.

Although it will take some time for workers’ skills to rise to meet today’s technology, other measures can, and indeed should be implemented. By far, the most important of these is to eliminate the ability of one class of a few individuals, the top of the top 1%, to influence legislation so disproportionally. What laws (or lack thereof) may be of further economic benefit to the wealthy and their corporations may greatly conflict with the well-being of the rest of Americans. Once that votes and voices are equalized, I have every confidence that our political system can remedy most all else through civil discourse as once envisioned.

Reply

JB March 13, 2014 at 11:15 am

How do low tax rates spur innovation? What does income tax have to do with Facebook going public? If you are the main person, you allocate yourself enough stock to make you rich. Now, are interest rates at historic lows a possible reason? If you can borrow money at dirt cheap rates, maybe that spurs people to start a business. Businesses were started in the 70′s, 80, 90′s at all levels of tax rates. Not every rich person has a lobbyist.

Reply

Peter N March 13, 2014 at 11:25 am

“Like Rockefeller, today’s tech wonderkids and their wealth are a product, not only of higher technical skills, but also of historically low tax rates, especially on dividends and capital gains.”
More distortions of the truth. THERE ARE NO CAPITAL GAINS UNTIL YOU SELL!!! Also, US business tax rates are some of the highest in the world.

” Also, the fact that technology has outpaced worker education and training has created an unemployment gap”
This is true.
“that drives down all other wages also.”
This is not. There are hi tech jobs that aren’t being filled even though they pay well. The sad truth is that many can’t be trained to fill these jobs.

Labor unions have lost power because mediocre and unskilled can be hired over seas for less money.

“of these is to eliminate the ability of one class of a few individuals, the top of the top 1%, to influence legislation so disproportionally.”
The last president I voted for was Reagan. My state has 2 democratic senators. My representative is relatively junior but she is a republican but more of a middle of the road kind.

Maybe the top 0.01% has influence but that isn’t one 1% of the 1%.

Reply

Man-of-Reason March 13, 2014 at 12:11 pm

PeterN, When computing net worth, assets are balance against liabilities, including tax liabilities. Therefore, all capital over and above the basis is balanced against either taxes on wages, interest or dividends to be eventually paid, or capital gains. Of course, the wealthy have a choice and can structure their future after taxes and will do so to realize the greatest return which presently is capital gains. Therefore, where I compute my IRA as worth it’s face value minus my projected taxes on ordinary income when withdrawn, they must likewise compute their net worth as stock value minus projected capital gains taxes.

Corporate tax RATES may be higher on paper, but the amount collected now is about a quarter of what they once were prior to the 80′s. The effective rates are much lower due to the favorable legislation for special interests I spoke of earlier.

Unions have lost to globalization where, for instance, Bangladesh can hire close to slave labor to work in dangerous factories which would never be allowed in this country, and then sell those products in this country. But they’ve also lost to the money in politics which have created zones of lower pay and benefits called “Right to Work States” that effectively shut out the labor movement’s ability to organize. America no longer values labor as we move from industrial to service. Wisconsin’s recent history attests to that.

Regardless of how many of the top 1% disproportionately influence elections and legislation, it’s wrong. In a democracy, each person expects to have one vote and to have one voice with which to engage in civil discourse, just as we are doing here. When someone wealthy uses his money to crank up the volume of his noise so that no one can hear you or me, democracy breaks down. It creates a plutocracy.

Reply

JB March 13, 2014 at 11:33 am

Sorry, if a company invests $1,000,000 to automate something and 10 people lose a job and the one guy running the machine is paid well, that is life. Production goes up, mistakes go down. Machines don’t fall asleep, get drunk, or die. Life in the big city. Some machines increase production like the Cotton Gin or the Combine for farmers. If a farmer doesn’t need 100 workers in the field picking lettuce and a machine can do it rain or shine and not need a green card, go for it. These guys can go start their own local farms.

When was the last time a building was built in China and shipped over here? The pros and cons about unions vs illegal workers is valid, but if I can build a building for 1/3 the labor cost and not get thrown in jail for hiring the questionable workers, why hire union workers? That is a gov’t issue they won’t address because they will have to deport all those people, but I guarantee you can train a hood rat to learn to haul stuff around a construction site and learn to build stuff. They just don’t WANT to. There is a reason hard labor is done by a certain worker. They are working in a better place than where they came from. Every country has unskilled workers doing the crap work, and at some point I want a skilled plumber and electrician, but at some point, the labor cost is worth the risk.

Reply

Man-of-Reason April 2, 2014 at 1:27 pm

I certainly agree that innovation and automation work to eventually improve our lives. That’s why worker productivity has almost doubled since 1970. The problem has been that all but 5% of the profits from that productivity increase has gone into the pockets of the upper one or two percent of Americans who have increased their net worth fourfold on average in comparison.

I recently read an article in which the author posited the following:
When efforts to limit collective bargaining succeed, more and more money accumulates at the upper end as workers are paid less while CEO’s and stock holders acquire more and more capital. As the top income earners accumulate wealth, they must find more investments in which to park it. However, putting more into American companies that provide services or products for the American market simply creates overproduction since the consumer hasn’t the extra income with which to buy more products. Therefore, we have seen a tremendous reinvestment in companies which export raw materials, and foreign companies doing business in emerging markets. The net effect is that much of the profit from increased American productivity is leaving our borders and creating jobs in third world countries.

Had the middle class shared in the productivity increases to the same extent as the wealthy, they would have increased their spending proportionally and American companies would have increased their production and profits proportionally also.

Reply

Peter March 14, 2014 at 8:32 am

MOR – your last post has the feel of someone trying to make the problem fit a political agenda rather than thinking this through. The whole perceived wealth inequality situation is not necessarily the problem of legislators or politics. It is entirely possible that the problem is simply one of a changing era in the economy, isn’t it?

The surprising thing to the average American is that the government actually has very little impact on all things economic. (The Federal Reserve is another story) Some of these changes proposed in past posts like raising taxes on the wealthy, eliminating loopholes, etc. may make us feel better politically, but they all have such a minimal impact to the overall economic progress of a nation …. thankfully.

Reply

Man-of-Reason March 14, 2014 at 1:13 pm

Although I agree that the president’s and congress’ ability to influence or improve the economy over the short term is very limited and much overblown, I must disagree that governments can’t impact wealth disparities within their respective borders, especially over the long run.

Simply look at Europe where wealth disparities were once much much greater and now are much less than in America. Where the top one percent own 40% of all capital in the U.S., the U.K’s top 1% own only 15%. Consequently, while the median U.S. family has a net worth of $38,786, the median British family has $115,242 (source: Global Wealth Data Book). The difference is directly associated with the tax structure and subsequent services provided.

Here in the U.S., some of our most wealthy citizens have used some of that wealth to influence legislation disproportionately to gain more wealth at the expense of the middle class. In Europe, Japan, Australia, etc., the impact of such money to influence elections and subsequently legislation, is greatly limited in comparison. However, this has been a problem with republican forms of government since ancient Greece and was so noted by their philosophers even then.

In the U.S., although it’s mainly the extremely wealthy who benefit the most, all of the top 1% have benefited also from such efforts over the last 35 years. The impact has not been “minimal” one the middle class at all, and many economists believe the disparity to be a drag on the overall economy.

Reply

Peter March 14, 2014 at 1:20 pm

Those countries didn’t experience the information age boom to the extent our country did in the last 20 years either…. You can’t simply isolate the variable that you want, that’s my main point. A number of factors go into the difference between wealth disparity of nations – including the size and demographics of the population, their economic situation and the government/taxation/politics.

I don’t know that anyone is for the current campaign finance situation. The fact that Obama and Romney raised $2 BILLION between them is just ridiculous. And to what end? So we can pick from one slightly different shade of the same color?

All I’m saying is that our tax system isn’t the main reason – or even a top reason – for the wealth disparity. And that’s even if we can agree that the wealth disparity in our nation is a problem in the first place.

Peter March 14, 2014 at 1:21 pm

OH and by the way – I thought we were talking about income disparity. Noticed just now that you were now talking about wealth disparity, which has a great deal to do with 5 years of stock market gains. The 1% were far less likely to yank the money out at the bottom of the market in 2008, which is where the masses got hurt terribly.

Man-of-Reason March 14, 2014 at 1:59 pm

Actually Peter, you used the term “wealth inequity” a while back, but regardless, I am talking about it, especially about how it’s affected by all income streams. My children will neither surpass me in either income or net worth, nor will many from middle income families be better of than their parents. That’s a shame since Americans have always expected the next generation to do better. Yet that was orchestrated deliberately and you can read about it from an economist/professor here: http://nebraskansforpeace.org/growing-income-inequality

Peter March 14, 2014 at 7:28 pm

Why won’t your children have the opportunity to exceed your wealth and income? Mine certainly will – at least on the wealth side because of the opportunities I am giving them and frankly the money they will probably inherit. Curious why you think your kids don’t have a chance to surpass you.

I think we hit on the biggest different between us. I don’t think there was some grand orchestrated plan to get the 1% richer. I believe in economic cycles, even on the extremes.

Man-of-Reason March 13, 2014 at 11:28 am

People will innovate regardless of tax rates and income tax has nothing to do with Facebook going public. However tax rates, being historically low, create a meteoric rise in personal wealth that once was somewhat checked by taxes.

No, not every rich person has a lobbyist, but most lobbyists work for wealthy individuals, corporations, or organizations controlled by the wealthy. Money gives a very few people greater influence over elections and legislation than the vast majority of Americans.

Reply

JB March 13, 2014 at 11:35 am

really? the janitors want a union and hire a lobbyist. They aren’t all rich. Now janitors are part of a union. why would a lobbyist work for a bunch of minimum wage workers? Farm workers have a lobbyist. They aren’t rich either. the lobbyists come from what ever side whats the gov’t kickback to their benefit. if the poor people can’t get organized, whose fault is that?

Reply

Man-of-Reason March 13, 2014 at 12:23 pm

I didn’t say “all”, I said “most”. If unions had so much influence, you wouldn’t see the tremendous reduction in union ranks, wages, and influence. Unions, however, at least represent many. Most all others represent the few, the wealthy and many times, the greedy (those who have much more than they can reasonably spend in their lifetimes, and still want even more).

Reply

Dude March 19, 2014 at 6:33 am

I make 45k a year and enjoy a good life. I have a college degree and have worked for a good company for years. If I wanted to study something else at 18yrs old to become richer at 50, I could have. I could’ve went into law or medical at 30 if I had wanted to. The rich pay more because they make more. I don’t want their taxes in my pocket but I admire the richer (I feel rich) for building roads, schools and things all of us need. The rich doesn’t need to pay for everyones own mistakes and I shouldn’t pay more for a hamburger because you didn’t finish high school. I look up to people who say I’m gonna make it and do. Really everyone should get what they put in with a little help when they may need it. Thank job creators. One day I may need the help of richer peoples taxes I hope I have done my part to have earned it.

Reply

J Love March 28, 2014 at 9:30 pm

Always left out of the Bush tax cuts is 1%ers (barely) like me that received ZERO benefit from them as we pay the alternative minimum tax. It was changed ZERO for high earners and is consistently higher than standard rates. It taxes dollar one at 26 or 28%. There is no gradual increase to a marginal tax rate. I have looked hard for the data and best I can tell, about 2/3rds of top 2% got ZERO tax benefit from Bush tax cuts. I could not find top 1% data. So, at least for me and, best I can find data on, a MAJORITY of top earners, shut the heck up about how we benefitted!
By the way, name me ANY other endeavor that punishes the most successful and rewards the least. Sure, a few cheat the system, but the vast majority had more talent, work harder, deferred years of earnings while in school and invested in education. I am a physician and work with such people every day. They average 50 to 70 hours aweek and had 11 to 15 (!) years of post high school training. They are ofen available 168 hours a week ( that’s all of them) and lose time with families, lose sleep and have little leisure time. I don’t think we would have a slow gowing economy if everyone did that. They DID build it!!!

Reply

Peter April 2, 2014 at 7:19 am

Agree. I’m in the “wealthy” categorization and am still waiting for my tax breaks. The irony is I noticed it a lot more when I was in more “middle class” range.

Reply

Man-of-Reason April 5, 2014 at 2:24 am

Here’s another tax break Peter. Perhaps your not wealthy enough to take advantage of it, but the money saved by the wealthy who do, must be made up in taxes by you. And it accounts for more than your share of food supplements for the poor.

http://www.businessweek.com/articles/2014-01-09/south-dakota-dynasty-trusts-tax-haven-for-rich-families#comment-1319732538

Reply

dave March 28, 2014 at 9:55 pm

Look at the wealth distribution in this country, on a scale it looks like 1 or 2% have 90% of the money. The middle class is disappearing in the US we are becoming like Mexico the haves and the have nots. Among the have nots are the working stiffs supporting everyone, corps. and the welfare recipients. The med/insurance and the higher ed industries constantly rip people off and our government does nothing to protect consumers. I feel like the gov looks out for the poor and their corp. bosses who put them there. Forbes had it right, 10% tax on everybody except the genuine poor.

Reply

JB April 2, 2014 at 12:12 pm
Man-of-Reason April 2, 2014 at 12:50 pm

The web site you reference is a sales pitch for this woman to make everyone a millionaire by following her advice. She ONLY interviewed self made people because she’s selling those who were not born to wealth, the formula for becoming millionaires (hard work, etc. etc.). But if you listen to her spiel, she talks about working 60 hours a week and being overweight before getting smart. Now that she works 20 hours a week, she’s the successful primary bread winner AND has time for her two children. Although she may have some good points to help anyone (although I’m speculating here) her conclusions about millionaires she’s interviewed are NOT scientific, but instead, meant to sell a product.

Reply

JB April 2, 2014 at 1:34 pm

Does this count as a company going from 2 employee to 240 count as trickle down? You can’t outsource this kind of job.

http://www.forbes.com/sites/jeffbercovici/2014/04/02/lyft-raises-250-million-series-d-to-fight-the-car-wars/

Reply

Man-of-Reason April 2, 2014 at 1:54 pm

We see such success stories happening everyday as the economy gathers strength. Most Americans don’t realize how far it’s recovered or that residential real estate prices and construction has bounced back to pre-recession levels in most areas of the country. As American companies innovate and adjust to changing markets, there are winners and losers.

I recently read about the tremendous concern car manufacturers have for the changing cultures with the U.S. as many people are forgoing the purchase of a car, and use companies like the Ride Sharing company (Lyft) illustrated in Forbes. It means that one company goes from 2 to 240 employees, but that auto manufacturers reduce workers by even a greater amount. Are the innovators in this case, “job creators” or “job destroyers”? Yes, in the short run, it increases unemployment, but overall in the long term, we are all better off (that is if the wealthy share the productivity increase with the rest of us).

Reply

JB April 2, 2014 at 2:42 pm

Taxi drivers have the most to lose in Lyft and uber. Most people won’t carpool now so Lyft won’t affect those drivers to work. Many people are keeping cars longer. My wife’s car is 13 years old and our friend kept her car 22 years and just got a new one last year. I intend to keep my car as long as possible. If everyone started to eat at home, restaurants lose employees but grocery stores make money. People ride bikes more, the bike stores make money. There will always be a dynamic that companies have to deal with. Vegas was hit hard in 2007-2008 when the credit crisis brought the country to a halt. Why does the wealthy have to “share”? They have put up money and capital to create jobs for Lyft. They aren’t going to pay someone $100 an hour when a taxi is cheaper to take. Costs are part of the salary. The idea is to make it cheaper to catch rides with Lyft in areas taxis don’t operate, but you can only pay people X dollars. If the CEO has stock and the company goes public and revenues grow, it doesn’t always translates into more money for the driver. It is all dependent on people using the service and thinking they are getting the service at a decent price. If I can take a taxi to the airport for $50, why would I pay someone from Lyft $75 unless there was a service provided the taxi driver didn’t have that is worth an extra $25…

Reply

ralphparker April 8, 2014 at 5:36 pm

I worked in consulting for a while, I made almost 400k every year as a pretty senior guy, but not a partner, plenty of people make this kind of money

Reply

ralphparker April 8, 2014 at 5:40 pm

One more thing, I did work 60 hours plus travel a lot and was never “off”, I could get a call any time and have to drop what I was doing and deal with the question at hand. You know what, I don’t even know what $400k does for you, a decent house a BMW and a European vacation, could probably do the same thing if you lived in Boise for 185k a year

Reply

Matt April 9, 2014 at 3:47 pm

No one, if you’re fortunate enough to work your way up a company and reach executive, bringing home 400k, Obama will take half of it. The starting salary for the highest tax bracket is ridiculous. Someone explain how taxing mid size company executives double the percentage Billionaires are taxed is fair. RAISE THE HIGHEST TAX BRACKET.

Sorry, needed a place to vent.
-tax season

Reply

Leave a Comment