Aside from the major hiccup the economy faced during the COVID-19 pandemic, the economy has been on a steady upward trajectory ever since years ago when we were talking about extending the Bush-era tax cuts. In case you don’t remember, we did end up keeping those cuts in place permanently for any individual making less than $400,000 per year, and for couples earning less than $450,000. Nowadays, those fortunate few who make more than that amount are paying a marginal rate of 35%.
But like I said, it’s been years since we passed the extension into law and I still don’t personally know anyone bringing home $400,000 per year. So who is actually paying that top tax rate these days? 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 the 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.
On the other hand, most presidents end up receiving so many requests for speaking engagements after they hold office that he or she will be set for life. They also get a pension equal to the salary of the head of an executive department (Executive Level I) would be paid. In 2020, that is $219,200.
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 careers. Plastic surgeons can make up to twice that amount.
Most people are completely okay with that though. After all, these people do a very, very important job.
3. CEOs and Founders
The median salary of a Chief Executive Officer (CEO) of a public company is over $700,000. These individuals are in charge of both short- and long-term profitability for their companies. CEOs generally have to know the industry inside and out (although there are certainly plenty of counter-examples), and need to have worked their way up over many years.
There are also plenty of CEOs from private companies who make quite a bit of money. The job can be stressful, but when you are the top dog, you reap the reward whenever your company does well.
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 few years.
5. Mortgage Loan Officers
This may be surprising to you because not many people think of this group of individuals as ones who can earn the big bucks. However, there are some loan officers, riding the wave of historic low rates, who are raking in the dough right now. After all, their salary is directly tied to commissions they earn as a percentage of the total loan amount they get approved for their clients. They work hard, often seven days a week in many cases due to unprecedented loan volume these days, but they are definitely getting rewarded for their hard work.
6. Speakers in Public Events
Before the pandemic, the good speakers were booking speaking engagements left and right. Not only do they speak at conferences, but they also have opportunities to speak to employees in their offices as well. Some people even write books that tie into their brand. They travel all over the country (and some all over the world), so clients are plentiful.
The pandemic has slowed business to a trickle, but these people will bounce back because everything will eventually go back to normal.
7. YouTubers
Can you see why your son or daughter would want to be a YouTuber yet? The popular video creators not only make $400,000 a year, but they can have earnings in the millions every year. The vast majority of people who try to make it big fail to amass a following, but many dream of the life of recording themselves play video games and earning the big bucks all the time. What they don’t realize is that those who earn millions not only have talent, but they also work extremely hard. If not, then they have a team of people who are behind all the videos that get produced. An entertaining video takes hours and hours of editing, but most people just see someone talk, have fun, and collect cash.
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 in between, the government estimates that raising the tax rate on this small group raise about $600 billion in new revenues a decade.
Not bad for a group that small.
What other professions that earn annual incomes of $400,000?
{ read the comments below or add one }
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I am surprised no one has posted this below
Subject: Re: An easy to understand version of how our tax system works
Below is a easy to understand version of how our tax system works, and how people can spin it.
BAR ROOM ECONOMICS – HOW THE TAX SYSTEM WORKS
Suppose that every day, ten people go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four (the poorest) would pay nothing.?The fifth would pay $1.?The sixth would pay $3.?The seventh would pay $7.?The eighth would pay $12.?The ninth would pay $18.?The tenth (the richest) would pay $59.
So, that’s what they decided to do.
The ten drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four were unaffected. They would still drink for free. But what about the other six – the paying customers? How could they divide the $20 windfall so that everyone would get their “fair share”?
They realised that $20 divided by six is $3.33. But if they subtracted that from everyone’s share, then the fifth and the sixth would each end up being paid to drink their beer. So, the bar owner suggested that it would be fair to reduce each drinker’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:
The fifth person, like the first four, now paid nothing (100% savings).?The sixth now paid $2 instead of $3 (33%savings). ?The seventh now pay $5 instead of $7 (28%savings).?The eighth now paid $9 instead of $12 (25% savings).?The ninth now paid $14 instead of $18 (22% savings).?The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the drinkers began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth. She pointed to the tenth man, “but he got $10!” “Yes, that’s right,” exclaimed the fifth. “I only saved a dollar too. It’s unfair that he got ten times more than I did” “That’s true!!” shouted the seventh. “Why should he get $10 back when I got only two? The wealthy get all the breaks” “Wait a minute,” yelled the first four in unison. “We didn’t get anything at all. The system exploits the poor”
The nine drinkers surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill.
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible!
I haven’t read every comment but wanted to throw in my 2 cents. My wife is a specialized surgeon and I am a research scientist. My wife earns more than $450,000/year by herself. Believe it or not we do not mind paying the high tax rates. I’ll explain why. A long time ago my grandfather told me that I should always be willing to give the government it’s share. He was a very successful business man and believed that the wealthy of America should be willing to give more because they are the ones that have the most to lose should something happen to our country. He further explained that the wealthy actually rely and use more resources than the poor. For him the example was tax money that goes to road repairs. Though his business had nothing to do with roads he explained that functional roads allowed every aspect of his business to run. He gave many examples and when I look at my job and my wife’s I can see all the connections. So, when we pay $150,000 dollars a year in taxes I feel like that is what makes it possible to make all of the money we get to keep.
You really need to read more of these comments to get the picture here.
I totally agree with everything your excellently constructed post stated – as far as it goes.
I cannot, however, let your out of context morality statement go unchallenged. You are describing a reasonable progressive tax system in which you pay your share. No problem with that. Your grandfather was absolutely correct. Many selfish people would argue against such a system, but the argument here is not about that. It is about “fairness”. And just what is not fair – what constitutes “paying your fair share”?
This discussion in these posts is not about reasonableness, it is about the question of whether what you are now paying is not reasonable (politically correct term – is “not fair”).
It would appear that many contributing to this blog would not consider your 33% (or so) to be fair. It is under attack, and given the populist nature of current American politics has the potential to go up significantly.
Do you consider that your statement would remain unchanged in the face of significantly increased tax rates? When does your grandfather’s reasonable definition of the public good become just a rip off? When do you decide that you don’t need the extra income anyway and back off somewhat?
By the way, all one has to do is look at Cyprus to see what happens when the government goes after increased tax revenue to feed populist appetites. The rich have moved their money out, and now that the horse has bolted, the government is closing the barn door on what is left – everybody else!
Be careful what you ask for, it can happen here. Because the rich have access to better help, they will move on. You can bemoan the fact that they have better consultants and are unpatriotic, but there it is. It will be everybody else that is left who will ultimately suffer. “There is no such thing as a free lunch”.
Very well and simply said Scientist.
Scientist: Please ask your Grandfather what he thinks today, of the system where 49% of the taxpayers and voters, pay NO FIT and that 85% of the FIT burden is bourne by the top 25% earners.
I don’t think your grandfather’s position was that one group, a signigificant minority, would be paying almost all the taxes while another, a significant majority, many receiving lots and lots of Federal benefits, pay nothing.
Bottom line…when does it stop? Should the top 10% pay 90% of taxes and we ALLOW them to retain a little bit to live on?
Again, show me proof that Romney was making millions in capital gains during the recession. Just about every stocks was down during that period.
You didn’t lose anything unless you had to sell.
Show me proof about your claims.
Although Romney only exposed his 2010 and 2011 tax returns, we can take for granted that earlier returns had similar or even higher AGI’s since he claimed to never have paid less than 13% of income in taxes. All of his recent income has been either capital gains or qualified dividends, with none taken as wages since he “retired” from Bain. Had he ever lost capital by selling stock at a loss in 2008 or 2009 like the rest of us, he would have deducted the losses from the gains in 2010 and 2011 to offset his gains, but his returns show that he did not.
However the best proof is that it would have been politically advantageous for him to say that he lost net worth during the recession just like the rest of us, and then produced his tax return showing that loss. But he didn’t do that, did he? Of course, he would have paid zero taxes for the tear, something he vociferously denied.
Ergo, we must deduce that Romney made millions in capital gains during the recession, just like he reveals in his two tax returns.
And while your at it, ask your grandfather what the top tax rate was in his day (1950’s = >92%). Then tell him that the top 10% now own 85% of all wealth in America, while the bottom 80% only have 5%, with those 47% who pay no FIT, only owning 0.3% of the American pie.
Let him get a good laugh by informing him that some of the top 1%, who alone now own 42% of all goodies that America has provided, are screaming and knashing their teeth because they are expected to pay 37% of the FIT with a top rate of 39.6%.
“And you think that it’s okay for someone who makes 40 times what you do to pay 13% FIT while you pay 20%?. Hardly progressive, is it. ”
You forgot the question mark.
You forget to mention Romney’s share of corporate taxes that he paid. You forget to mention the corporate taxes that my partner and I pay in addition to your effective taxes. If you mention effective taxes I will always point out that corporate taxes that the stock holders pay.
I won’t let you get away with your liberal BS.
You want to cry “foul” since poor Mitt Romney doesn’t get credit for corporate taxes paid by Bain Capital. However you won’t acknowledge that the least of Americans also pay a high percentage in taxes other than FIT, and even pay Romney’s share of Bain’s taxes when he raises the prices of products to pay the taxes. Did anyone else here think it very odd that when the recession hit and most of us lost 30% or more of net worth, Romney was raking in tens of millions in “Capital Gains”?
Rolling Stone reported the following;
The Federal Bailout That Saved Mitt Romney
Mitt Romney likes to say he won’t “apologize” for his success in business. But what he never says is “thank you” – to the American people – for the federal bailout of Bain & Company that made so much of his outsize wealth possible.
According to the candidate’s mythology, Romney took leave of his duties at the private equity firm Bain Capital in 1990 and rode in on a white horse to lead a swift restructuring of Bain & Company, preventing the collapse of the consulting firm where his career began. When The Boston Globe reported on the rescue at the time of his Senate run against Ted Kennedy, campaign aides spun Romney as the wizard behind a “long-shot miracle,” bragging that he had “saved bank depositors all over the country $30 million when he saved Bain & Company.”
In fact, government documents on the bailout obtained by Rolling Stone show that the legend crafted by Romney is basically a lie. The federal records, obtained under the Freedom of Information Act, reveal that Romney’s initial rescue attempt at Bain & Company was actually a disaster – leaving the firm so financially strapped that it had “no value as a going concern.” Even worse, the federal bailout ultimately engineered by Romney screwed the FDIC – the bank insurance system backed by taxpayers – out of at least $10 million. And in an added insult, Romney rewarded top executives at Bain with hefty bonuses at the very moment that he was demanding his handout from the feds.
But the FDIC documents on the Bain deal – which were heavily redacted by the firm prior to release – show that as a wealthy businessman, Romney was willing to go to extremes to secure a federal bailout to serve his own interests. He had a lot at stake, both financially and politically. Had Bain & Company collapsed, insiders say, it would have dealt a grave setback to Bain Capital, where Romney went on to build a personal fortune valued at as much as $250 million. It would also have short-circuited his political career before it began, tagging Romney as a failed businessman unable to rescue his own firm
With his rescue plan a bust, Romney was forced to slink back to the banks to negotiate a new round of debt relief. There was only one catch: Even though Bain & Company was deep in debt and sinking fast, the firm was actually flush with cash – most of it from the looted money that Bill Bain and other partners had given back. “Liquidity is strong based on the significant cash balance which Bain is carrying,” one federal document reads.
Under normal circumstances, such ample reserves would have made liquidating Bain an attractive option: Creditors could simply divvy up the stockpiled cash and be done with the troubled firm. But Bain had inserted a poison pill in its loan agreement with the banks: Instead of being required to use its cash to pay back the firm’s creditors, the money could be pocketed by Bain executives in the form of fat bonuses – starting with VPs making $200,000 and up. “The company can deplete its cash balances by making officer-bonus payments,” the FDIC lamented, “and still be in compliance with the loan documents.”
In March 1992, according to the FDIC documents, Romney approached the banks and played the bonus card. Allow Bain to pay off its debt at a deep discount, he demanded – just 35 cents on the dollar. Otherwise, the “majority” of the firm’s “excess cash” would “be available for the bonus pool to its officers at a vice president level and above.”
Romney’s decision to place executive compensation over fiscal responsibility immediately put Bain on the ropes. By that July, FDIC analysts reported, Bain had so little money left that “the company will actually run out of cash and default on the existing debt structure” as early as 1995. If that happened, Bain employees and American consumers would take the hit – an alternative that analysts considered “catastrophic.”
In the end, the government surrendered. At the time, The Boston Globe cited bankers dismissing the bailout as “relatively routine” – but the federal documents reveal it was anything but. The FDIC agreed to accept nearly $5 million in cash to retire $15 million in Bain’s debt – an immediate government bailout of $10 million. All told, the FDIC estimated it would recoup just $14 million of the $30 million that Romney’s firm owed the government.
It was a raw deal – but Romney’s threat to loot his own firm had left the government with no other choice. If the FDIC had pushed Bain into bankruptcy, the records reveal, the agency would have recouped just $3.56 million from the firm.
I hadn’t though of it at the time, but you’re right! Even the largest and best run pension funds lost billions. How did Romney manage to gain capital?
If the small business owners vilified in these posts are able to make huge sums of money on the backs of the workers, yet contribute nothing themselves, and are able to effortlessly jump through tax loopholes; then why doesn’t everyone start a successful small business?
You lost the Civil War 150 years ago Joe, and McCarthy was discredited as a liar and nut-job in the early ’50’s. Accept it.
Recall that original premise of the income tax was to tax only millionares. This is a prime example of the way government works. All you have to do is give them an inch and they eventually take everything. We are not a Marxist economy yet but we are getting there. I can tell you from first hand experience that the Democrats hate small businesses. They are suspicious that we do not pay our taxes and they undoubtedly find it difficulat to extort money from us. That’s the bottom line for them, they must by their very Marxist nature, grab everything and allow nothing. The 16th amendment should be repealed and we should force the states to carry the weight of governing as set out by the Constitution.
Wow, what a long long thread. All these smart commenters going round and round in circles. Is there any hope at all for the common man to understand our bloated tax system? The big takeaway from all this conversation is that we desperately need to simplify our tax system!
Salesman can make that much money. Sales in many fields offers the opportunity to be in the top 1% as defined here. And without the headaches of being a business owner. Of course it comes with its own share of stress. But that’s why it pays the big bucks.
The following video of a study explains a dangerous phenomena in America over the past 35 years. The top 1% have increased their share of America’s net value (40+ trillion) to 40% from 9% in 1976. Although many of you have used the term “fair” or conversely, “unfair” in describing the increase in marginal tax rates, the term is actually relative. What’s ‘fair’ depends only on what a majority of Americans think is fair. It’s only an opinion. But the study polls Americans to determine exactly that and gets a definite collective opinion.
Watch the video here> http://news.yahoo.com/wait–wealth-inequality-the-new-harlem-shake—214735978.html
What the video fails to explain is how the top 1% increased their wealth so dramatically during that time. (Oh, I know one percenters, it’s because they work harder, are more educated, smarter, and more handsome than the rest of us. Wrong.) It also doesn’t speculate about what sort of America we will find ourselves in should this trend continue without being reversed.
The answer lies mostly with tax and regulation cuts which favor the wealthy started in 1981 by President Reagan. This was supportive of an insidious ideology called, “Starve the Beast” which is a deliberate plan to create a fiscal crisis in order to reduce the size of government. Tax cuts to starve the congress of revenue started in 1981 and by 1988, increased the net after-tax take home pay for the CEO making the equivalent of $10 million by 136% (yes, I did the math as MoR suggested), while the average family with an AGI of $50,000 (2013 dollars) actually saw a 2% after tax reduction. For a good explanation, search for “Starve the Beast”, or click here> http://www.post-gazette.com/stories/opinion/perspectives/paul-krugman-starve-the-beast-fiscal-calamity-is-the-gops-plan-to-shrink-government-234845/
By cutting taxes, Reagan increased the national debt by 57% his first term and 41% his second. Bushes I and II continued the tremendous debt with tax cuts, and the economic pain we now feel is the planned starvation. You see, the “Beast” was the government. However, when it comes down to it, it’s a government of the American people and we, especially the middle class, have been greatly starved by this perverse ideology. The only way out is to raise revenues by taxing everybody, but especially those who benefited the greatest at the expense of the middle class, those who’ve seen their incomes soar while the middle stagnated, those for whom the government borrowed to stoke the economy so that their businesses could flourish beyond reason. Go back to pre-Reagan tax schedules if need be, and if then there is still a budget imbalance, consider cutting some spending (like allowing medicare to negotiate drug costs with the companies).
Oh, and learn the truth about who did this and get them the hell away from our government and our economy.
Even the most simple tax system won’t help and uneducated, illiterate person break into the upper middle class. Making 30k a year is a limitation to becoming wealthy. You have to wducate yourself at a public library or comminity college. you have to think outside the box if your resources are limited. there isn’t much anyome can do for someone withmajor medical issues. that is just the randomness of life. smart people have gambled away fortunes and janitors have ledt millions to charity.
it should also probably break out those medical specialists and finance people that are CEOs of their own corporations or they get double counted.
This article is wrong. CEOs do not average 700k a year when you consider that many states require EVERY corporation to have a CEO. if you qualified it as CEOs of publicly traded companies or even corporations with a certain amount of revenue it may end up being true.
More lucky people. Is it luck to build the better mousetrap?
http://finance.yahoo.com/news/what-extremely-successful-people-were-doing-at-age-25-152646120.html
The higher tax rate is easily offset by using skilled Immigration Lawyers to legally circumvent hiring qualified Americans.
Google up this “Cohen and Grigsby” video
http://www.youtube.com/watch?v=TCbFEgFajGU
Immigration attorneys from Cohen & Grigsby explains how they assist employers in running classified ads with the goal of NOT finding any qualified applicants, and the steps they go through to disqualify even the most qualified Americans in order to secure green cards for H-1b workers.
They are a God send for my company.
You realize there is a limit on the number of H-1b workers that can be employed? If they are in America, they are paid American wages, not what they would have received in India or China or minimum wage. Many are engineers and accountants. This might be a fraction of companies, but not every company. It is a big hassel to employ H-1b immigrants.
Everyone pays property taxes. the rich can choose to live modestly or excessively. The taxes are commiserate with the value of the home you choose. You can also rent an apartment, stack 4 kids in it and pay the same property tax as someone with 1 kid in the apartment next door. Why should the value of my house determine how much I pay a school district? Charge me per kid. I have no kids, so why should I pay at all? Some things are for the common good, some aren’t.
I guess I am just lucky to live here.
http://www.usatoday.com/story/money/personalfinance/2013/03/23/states-income-tax/2002991/
Yes you are!
Tommie T:
Why don’t we just enslave everyone who makes more than say $60,000? They can do all the work and all the people on welfare and unemployment can just live off what is taken from the rich. Gee this way, the “Poor” can get Iphone 6’s as soon as they come out and can be given 80 inch flat screen HDTV’s so they can watch reality tv all day. I just hope you will throw the rich some tomato soup and saltines.
Are you serious? I used to think the blogger who wrote that: “Rich people making $500,000 a year shouldn’t complain that they pay 50% income tax on amounts over $450,000, since they don’t pay tax on that first $450,000” got the award for the most outrageous comment here. You now take the title. Congrats!
(Oh, and here’s breaking news for you: People on unemployment and on welfare don’t have income so they don’t pay income tax. Nothing is getting “squeezed” out of them Tommie.)
Actually MOR. In a partnership or S corp you pay your business income taxes on your form 1040, Sch E. Just like a sole proprietorship. Oh, form 1040 is the US Indeividual tax return in case you didn’t know.
Any the employees who have no choice? Well, actually they have a choice, to be employees. To work for this company. Most states abolished indentured servitude years ago. Actually I think all states did!!
And I would be willing to bet you anything, that the vast majority of Peter’s financial planning clients are TAX PAYERS not TAX TAKERS. You are so funny some times!!
We are all taxpayers, even the least of us. That’s something you refuse to acknowledge or understand.
I guess if you buy cigarettes you probably pay some kind of tax.
But, We ALL don’t get free cellphones, welfare, ADC, free college money based upon need, free job training, earned income credits and other tax credits (child care, tuition, etc…) that allow some to get a FITax refund WHEN THEY DON”T PAY ANY INCOME TAX.
What you don’t acknowledge or understand MOR is that for years and years the upper 25% or so has been basically paying for every Federal program, Federal freebie, etc… Don’t need you to bow down, but why villify those that make it all possible?
In an alternate universe, all the “rich” people get fed up with being made out to be the bad guys and stop paying income and estate taxes. Wonder how that turns out for everyone else?
Where is all of this free stuff everyone is talking about? I have no income and I get nothing from the fed aside from what I earned with my hide, protecting you pretentious buffoons and your way of life. It’s time to pay it back. I don’t blame rich people!!!!!! I blame greedy rich people!!!! I don’t care who you are or what you do, your sorry ass is not worth a hundred million dollars a year unless your the guy that cures cancer and at the same time prolongs the human lifespan to a thousand years!!!! Give back 90 of that 100 million to the people in the form of jobs and we’ll let you pay no more taxes. The system of capitalism is only supportable if the more you have the more you must share with everyone else. If you keep taking all the capital out of the economy your tax rate is going to skyrocket because you will be the only ones that have anything to tax.
But 47% don’t pay federal income tax and they vote for politicians that buy their vote with the money from the other 53%.
Listen to Jeff. He doesn’t get any freebies. Unfortunately, you have no firsthand knowledge of the plight of the poorest Americans, how they live, what they believe, or what they endure. If life were so easy and they received so much from your tax dollar, then they would not be sleeping on the streets in cardboard boxes and getting their meals at the church run soup kitchens.
I noticed that what you didn’t respond to was the point of the post:
“Your customers are not only paying you, but through the prices you set, they pay your business taxes also.”
Ok, I will play MOR. Let’s just have a national sales tax. On everything. Nothing could be more progressive…spend more…pay more in taxes. The Rich spend more, so they’ll pay more. The poor don’t spend much so they don’t pay much…just no exemptions or exceptions on certain kinds of good or services. Right?
I’ll stay up a bit to learn why this isn’t fair either, to your 49%.Can’t wait!!
Let’s face it. The only system that you woudl approve is one where the upper 20% or 10% are enslaved by the rest of the population. They work hard and pay for everything and are allowed by the non contributors to retain a small percentage of their earnings…..Oh wait…that’s where we are headed today!!!!
I feel bad for Jefferson, Franklin, Adams and all are veterans who gave their lives for the opporunities that this coutnry provides. They are spinning at warp speed in their graves.
NerdHero — You stated, “Nothing could be more progressive…spend more…pay more in taxes. The Rich spend more, so they’ll pay more.” This is not progressive. Under a national sales tax, the tax rate would be flat and would not change as the amount spent increases. It would be progressive if the tax rate would increase with amount spent. It would be difficult to have a progressive national sales tax based on the increased amount spent per year.
National Sales Tax, would only help the rich especially those that make more money than they can spend. A person who makes $20 million a year and spends $10 million a year would only pay tax on the $10 million. Under the current progressive income tax, he would pay tax on the $20 million that he made.
It’s estimated that it would take a nearly 36% sales tax to make up for the elimination of income tax. Sales taxes are not imposed on services and if they were, lots of services would be done without record to avoid such a heavy tax. They’re not imposed on investments either.
The middle class purchases many more goods than services, while the wealthy purchase many more services and use their excess income to invest (perhaps in emerging markets like BRICS), neither of which would they pay taxes on. Therefore, as a taxpayer has a higher and higher income, the percentage of tax he pays decreases more and more. This is a great deal if you are Warren Buffett and the more wealthy you are, the better the deal. It’s called regressive taxation and has been opposed by a majority of Americans from day 1.
Thomas Jefferson actually believed that taxes should be payed by the wealthy alone, with the farmer (then the common man) paying nothing. I don’t think he considered that to be “enslavement” at all, since he was among the wealthy elite of the time. Yet even though the bottom 20% pay 17+% of their incomes in overall taxes, you believe you’re being enslaved because your income over $450,000 will be taxed at a 39.6% rate. Now, exactly do you figure that?
“Lowest 20% of Americans pay 17.4%” in effective taxes. And that doesn’t count the increase in prices of the products he pays for caused by corporate taxes. It looks like the lowest fifth of taxpayers sacrifice more than their fair share as measured by financial pain. How much pain does someone who’s after tax income is more than $150,000 feel in comparison to those making less than $25k and paying direct taxes of $4,330 (17.4%) plus a like amount to pay for price increases on your products in order to pay your business taxes?
How about this! Institute a 100% estate tax. You can’t take it with you and you have to spend it while you are alive. You can’t bequeath it and if you want to give it away must give it away before you are dead. The moment you are dead, everything you owned goes to the government.
Then the wealthy would set up corporations for their heirs with the express purpose of losing money to them. Default on loans and the heir gets the real property used as collateral. Make a bad business deal with an heir’s corporation, and he wins again. even stuff like gold or diamonds can be lost by the parents and found quietly by the children after the parents are gone. Don’t worry Jeff, there are always ways the wealthy pass down their wealth. But I do agree that inheritance taxes should be raised greatly.
“Effective taxes eh” Wonder how that was spun to come up with that number.
So someone like me, not in the 1% but probably in the 7%, paid 20% FIT, 7% State 2% city, 8% property taxes and I guess I get the 17.4% “effective taxes too. That’s over 54%. Seems like a “FAIR SHARE” to me.
By the way, do you back out of the “17.4% effective taxes” the impact of NO taxes on welfare, refunds (when you don’t pay any income tax). school grants, job training programs, preferred/subsidized student loans, and on and on. You should do that MOR if you want to be “fair.”
All of left leaners want to always focus on the 1%. But actually the 71% of taxPAYERS is made up of the top 10%, the 85% of taxPayers is made up of the top 25%. How many of those people outside of the 1% inherited it, lucked into it, etc…? Those people, including me, are tired to paying and now being asked to pay more and more and more….and being called bad guys in the process.
Not everyone in the 1% are Disney CEO’s or Kennedy’s or even Mrs. John Carrey’s. That certainly is the case with the top 10% or 15% or 25%.
And I’ll admit that not everyone in the 49% is a deadbeat. Happy to pay for training and care for those who want to advance themselves, for the elderly, the sick, mental health victims, retirees, and military. But if we can’t all agree that we have created and are now perpetuating a culture of takers and users vs. producers and contributors, then we are all in big trouble.
Curious, no commentary re the Florida law that requires passing a drug test to get welfare. I figured that some of you could explain to me how wrong that idea is…….
You are very right about a $400,000 annual income not putting you in the “wealthy” class. It takes a great deal more than that which is usually accomplished by having wealth to begin with, as in “net worth”. Wealthy is when you can reside in the Hamptons, or on Lido Isle, have a second and third home, and don’t ever have to worry about working – unless you really want to of course.
I don’t understand why you paid 20% FIT when you were only in the top 7%. Obama made about $1 mil which is well into the top 1% and paid about 20%. What gives? Your figures don’t add up either. What’s with the 17.4%? You didn’t pay that, nor did you total 54% in taxes. What are you trying to say?
However, I am greatly encouraged with your next to last paragraph Rick. You’ve recognized who is in the group who pay no income tax, and express a concern we all have with how we can keep a few from taking advantage of a system designed to care for those of us who can’t care adequately for themselves. How do we keep from creating “moral hazard” and disincentives to rise above temporary difficulties to become productive members of society again? To answer that we must look at each program and at the many safeguards to prevent such things. What we can’t do is simplify by stereotyping and generalizing. It’s simply not that simple regardless of what we want to make it.
I did not realize that the only taxes I pay are FIT? What about State IT, City IT, Property Taxes, Sales Tax, and as an employer the employer match payment for FICA. And because I buy goods and cars and all kinds of taxable stuff, I am paying lots and lots of taxes like MOR suggests. Owe and my estate, already subject to all the foregoing taxes is subject at my death to over a 50% Fed Estate Tax (and a State estate tax in my case).
So what is my Effective Tax Rate? Must be over 108%. Egads!!! I don’t even want to know!
Mmmwwaaaahahahahahaha! You so funny Rick!
Made over $265,000 last year. Paid $51,000+ FIT including AMT. No Long Term cap gains for cap gain’s rate. All the other taxes are essentially fixed. And of course I paid that other 17.4% of “effective taxes” at least I paid whatever those taxes are in that world.
(Anticipating MOR: I do round up!)
And you think that it’s okay for someone who makes 40 times what you do to pay 13% FIT while you pay 20%?. Hardly progressive, is it. For him, the tax savings is more than twice your annual salary. Put another way, you’d have to pay like FIT for 14 years to make up for what the government lost in just one year.
Look closely. His lifestyle doesn’t change much at all if his after tax net is $8.7 mil, $8 mil, or $5 mil. The excess only goes to further investments, many of which are in offshore tax havens (thinking Romney here). Your sacrifice of $51k is certainly more dear to you, and any tax on someone making $25k can be crippling, forcing decisions on what or even whether to eat or pay the rent.
You know what MOR? I never thought of it that way. Never felt angry or disgusted towards people that earned more, even if the didn’t pay at a rate as high as I do (not many people like that really). Never wanted to travel to this Rich family’s house and steal their money and assets away during the night. Never felt jealousy or envy. Still don’t.
That person likely worked harder than I do, took bigger chances, etc.. That person likely employs more people than I do, still pays more in taxes, takes little from the Gov’t. He is more on the plus side as a tax paying contributor.
And even if that person/family has a lower rate because of cap gains rates, much of those “gains” was already taxed, maybe more than once.
And if you choose the 13% rate because of Mitt Romney and his return, I note that he made several millions of dollars in charitable contributions…I think it was about $2 million in one year (and he did not deduct it). Here’s a question: How many members of the 47% does it take to make $2,000,000 in contributions in one year? Many Many Many…….
In fact I never felt that the 49% were not carrying their weight in this country, until the class warfare escalation by the left and the daily vilification of “Rich” people started and then formed the primary basis for the last two presidential elections. Now we are faced with essentially a tax civil war in this country based in large part upon misconceptions on both sides, but mostly, on the whole silly and false idea that “Rich people don’t pay their fair share.”
So there’s the source of my resentment to many of those in the 49% and even others who pay some FIT and who still shout out “Make them pay their fair share” or “They should not be allowed to keep so much of what they earn” (Read that here last week). I feel like a parent of a teenager who “needs a car” but has no way to pay for it, no play to pay for it, doesn’t want to work for it, or for the gas, insurance and maintenance, feels that I owe him that car and when the whole mess goes terrbily wrong, I end up paying for it. Sound familiar?
The rich need to pay their fare share. Income tax is only 40% of their income. Add in local income taxes and most rich people get to keep almost 50% of their income. This is an outrage. Since the shortfall has to somehow get squeezed out of people who are unemployed, who certainly don’t have cash to spare. Plus people on welfare have to pay up too. Who have even less cash to spare.
According to alaxkid’s previous post, these are the average overall local, state, and federal tax burdens for the following income groups:
Income Group….Total Taxes Paid
Lowest 20%………..17.4%
Second 20%………..21.2%
Middle 20%………..25.2%
Fourth 20%………..28.3%
Next 10%………..….29.5%
Next 5%……………..30.3%
Next 4%………..…..30.4%
Top 1%………………29.0% (Top 10th of 1% pay even less)
Compiled by the Institute on Taxation and Economic Policy Tax Model
Again, your score keeper is biased. It picks and chooses those taxes it wants to make its point. The ITEP didn’t include the property tax I pay on my home AND business. It doesn’t count my share of the corporate taxes that I own through stock. It doesn’t count the business tax I paid to the state nor the part of the social security tax that I must pay as an employer.
MOR, the Institute on Taxation and Economic Policy is just another group like the CTJ. In fact there is a link to the CTJ on the ITEP site. I did a recursive search to see who funds these tax ‘fairness’ organizations. Get this, the bottom 47% doesn’t pay any federal income tax. It can’t get any more ‘fair’ for them, just less ‘fair’ for the other 53%.
BTW, I looked at the ITEP website and saw that the state I lived in is in one of those ‘terrible 10’ states because there is no income tax. That is why we move where we are now. It also only has a small tax on a businesses gross income which is good for those companies with a high profit margin but not so good for low margin retail stores. The state we moved from has missed out on many $100,000s in state income tax from the employees and our business.
That is voting with your feet.
Property tax you pay on your business is a business expense, not a personal expense just like the gasoline tax for and other taxes on company cars. So are corporate taxes (let’s no go down that road again). ITEP also doesn’t count those taxes that businesses pass on to consumers in the price of their products. ITEP does count all property taxes on homes and excise taxes on personal property as well as all other personal taxes.
Yes, both sides can play fast and loose with statistics if they wish, but the point is that our overall tax system is not so progressive as Americans think. ALL Americans pay, not just the 53% as so many here argue.
I own half the company I pay half the company taxes. If the company were a sole proprietorship or partnership then it would be more clear to you that I am paying business taxes too.
If you want to count everything then you should count your share of the taxes paid by the companies that you own through 401Ks or IRAs.
Your on a slippery slope when you start counting taxes passed through or down by businesses. If you want to count taxes on corporations passed down through dividends, or property taxes on stuff owned by a corporation, all of which is considered business expenses, then you must count more taxes paid by others when those same businesses pass taxes on to consumers by raising the price of their products.
You are not in competition with the tax code or regulators, but with other businesses who produce the same product as you do. All of you pay the same taxes and must comply with the same regulations, and therefore, you all pass your business costs on to the customer, or you won’t be in business long.
The question is, “Do you really want to keep score that way?” You see, the less someone makes, the greater percentage of their incomes are spent on consumer products. That means a still greater percentage of taxes paid by the poor in comparison to the wealthy. Also, if you get to pass on the tax to consumers, should we really count you as paying it, or was it really the consumer?
Give us a break. My customers are paying me not the IRS. Can’t you see the difference? If a company is a sole proprietorship or partner ship there is little difference between company taxes and personal taxes.
In my case the corporation got whittled down to only two owners.
It makes my dividend case other others very simple to see. Look for my dividend post. The numbers are rounded a bit but close to reality.
I have no idea what you think is fair but if I saw a politician use the phrase fair share I would heckle him for sure. I just did my taxes and I am not happy.
Only 53% pay FIT. The rest are freeloading. They have NO incentive to elect responsible politicians because they don’t carry any of the burden.
You account for your business separately from your family income. You’ve chosen the most advantageous corporate/business structure for your economic circumstances to have the most favorable tax treatment, a choice your employees don’t have.
Your customers are not only paying you, but through the prices you set, they pay your business taxes also. Oh, and the half of Americans you call “freeloaders” are among those customers who pay your taxes. I suggest you be more kind to them.
You guys are nuts. Customers pay us, they don’t pay our taxes. If we make a profit then we pay federal taxes.
I originally said, “… you all pass your business costs on to the customer, or you won’t be in business long.” So if you want to count taxes paid by your corporation or business as being passed down to your family, then you must also count the increase in product price passed down to the consumer as part of his tax burden also. If you do of course, everyone can see that your family really didn’t pay the tax at all, but it was the customer who actually did. I told you it was a slippery slope.
Perhaps, when we talk about who pays what in overall taxes, we should stick to what we, (not our companies) personally and directly pay as the Institute on Taxation and Economic Policy has done.
Peter, your taxes are paid from your earnings, not your profits. Profits, if any are whats left. Do you pay yourself?
And, by the way, as 1 of the 53%r’s who can’t get unemployment or SSI. If I can’t get a job from you, where do I get the money to eat. You are the cause of the 53%’s that take because 50% of them can’t find work, otherwise if employment was high enough, there would be less tax burden on all.
“Peter, your taxes are paid from your earnings, not your profits. Profits, if any are whats left. Do you pay yourself?”
I own half the company so I am effectively paying half the company’s taxes. If we changed to a s-corp or partnership I would be literally paying half the companies taxes. I see no distinction as far a as the tax burden goes. My wealth is being taxed.
“And, by the way, as 1 of the 53%r’s who can’t get unemployment or SSI. If I can’t get a job from you, where do I get the money to eat.”
Honestly, I don’t care. Go to the Salvation Army or some other soup kitchen.
“You are the cause of the 53%’s that take because 50% of them can’t find work, ”
What makes you think the world owes you anything? My mother taught me at a very young age that the “world does not owe you a living”. Make you own job if you can. I doesn’t sound like you can.
You seem to think the world owes you a job. Why, when you don’t respect the people that risk their money to provide you the job?
The world has winners and losers but it is not a zero sum game. People can and do create wealth. The whole notion that the rich get rich at the expense of the poor is bogus. My parents were not rich. I have not inherited any money not do I care if I do.
The problem with some people is that they believe wealth is a zero sum game and don’t know how to create wealth.
“Tax the rich, feed the poor until there are no rich no more.”
I’d loved to save the world by Ten Years After 1970.
“Of course luck plays a part in all life, but remember -“Fortune favors the prepared mind.” Can’t we get off luck as a subject of this discussion? ”
Was I lucky that I had a mentor at IBM 50 years ago who recognized, encouraged, and promoted my skills? Of course I was. Would I have ended up CEO of a public Software company without him? Never! Would he have promoted me throughout my career if I did not have the requisites for success – commitment, intelligence, integrity, leadership ability, decisiveness, and the right experience? Of course not. It wouldn’t matter how hard I worked with out the big break he provided. On the other hand, it wouldn’t have been provided if I didn’t bring a lot to the table.
Luck is involved in everything we do, but it is only part of the story.
Lana Turner was “discovered” when she skipped a class and got a coke at a malt shop. and got her big break. What if she hadn’t skipped the class? We no doubt would never have heard of Lana Turner. But don’t forget, she certainly brought a lot to the table! It wasn’t just luck, but it certainly wasn’t ONLY luck!
You can’t rely on luck to win at Poker; but, obviously the luck of the draw can make a difference. But does anybody really think that poker players who are consistent winners are successful because they are luckier than their opponents?
There have been many serendipitous happenings throughout all of history. But if the benefactors of these events did not bring something significant to the table, were prepared to recognize , and grab the moment – what difference would it make?
We are spending far too much time dancing around nuances in this discussion.
I repeat: “Of course luck plays a part in all life, but remember -“Fortune favors the prepared mind.” Can’t we get off luck as a subject of this discussion?”
Jack,
The only reason “Luck” was in the conversation was that so many here attributed their own good fortune to being superior to all others as evidenced by their greater incomes. However, for every bright, hard working, talented individual who tops that rarified $400,000 plateau, there are 10 to 20 other people who are just as bright, hard working, and talented who never make that much. Somehow, those here who have been so fortunate but don’t want to pay more in taxes to pay for their tax savings which ran up this tremendous national debt over the past 35 years, have justified their positions buy denigrating those who make less as ‘undeserving’ and just not as qualified as the 1%. That’s simply not true.
The logic that ‘if someone makes more that $400,000 per year, he is most probably smart, hard working and talented”, doesn’t play out in reverse. “If someone is smart, hard working and talented, he will make more than $400,000” is neither logical nor true.
The bottom line is that there have always been more opportunities at more levels of the strata in this country than anywhere else in the world, so doesn’t that just make us ALL as lucky as can be to live in the good old USA? Remember the “American dream”? It still exists, regardless of the misleading political rhetoric from both sides. We are still the best, regardless of what our politicians say to mislead us. Fiscal cliff? Forty Seven% 1%? “Fair share? We are all lucky just to live here. From an opportunity point of view, would we be luckier if we lived in Europe? China? Japan? Russia? South America? Africa?
I know that we have to have extremist push/pull from both ends of the political spectrum in order to move toward moderate governance in this country; but, isn’t this conversation getting just a little silly after 2 months?
So luck has entered the conversation, isn’t it time it exited?
I agree that we’ve probably explored “luck” to its fullest. However, although the American dream works very well for some, okay for many and so-so for most, it doesn’t work well at all for many too. They are the risk takers who lost, the businesses that failed, and those who’ve even socially disenfranchised in their communities. We must all be aware of that in order to understand where other Americans, not like ourselves, are coming from, and how to respond respectfully to them. Or friend Jeff here sounds like one, and the Rev. Jeremiah Write spoke for others.
Finally, we must all be mindful that it’s natural for those who have money to want to keep and pass it down to their heirs ad infinitum. Wise men like Andrew Carnagie or Warren Buffet who understand the corrupting influence on families are rare. The corrupting influence of money on politics and legislation will allow this country to turn from the American dream of Meritocracy back toward the Aristocracy we left behind in Europe if we are not vigilant. We are less upwardly mobile now than we once were as a result, and getting more so with time.
I really hope I’m not the one MOR is saying is giving this impression:
“So many here attributed their own good fortune to being superior to all others as evidenced by their greater incomes. Somehow, those here who have been so fortunate but don’t want to pay more in taxes to pay for their tax savings which ran up this tremendous national debt over the past 35 years, have justified their positions buy denigrating those who make less as ‘undeserving’ and just not as qualified as the 1%. That’s simply not true.”
I already pay “more” in taxes.
I am not better than anyone based on my income.
My tax savings didn’t run up the debt – rapidly increasing and irresponsible spending did.
I don’t believe I denigrated anyone.
And I NEVER use the word undeserving. I don’t believe anyone deserves anything but an opportunity, which America offers in spades.
Thank you to both Peter’s for writing so well and explaining how this country gives EVERYONE lots of opportunity to succeed.
Their posts should be required reading for every parent and every high school and college student in this country.
Another wonderful story is that of Dr. Benjamin Carson.
http://www.biography.com/people/ben-carson-475422
In addition to his Biography, his recent speech at the National Prayer Breakfast provides an excellent analysis of what is wrong with this country today and how simple steps like a fair tax system (flat rate tax) and a resturn to a society where personal responsbility is the duty of each citizen,can turn things around.
http://www.youtube.com/watch?v=PFb6NU1giRA
This discussion is getting ridiculous. The anecdotal examples on both sides mean little. So far the discussion in these posts has been nibbling around the edges of what makes this country great. Are we having a “forest for the trees” moment?
Even though there are a lot of very smart hard working people around the world, all the breakthrough innovation of modern history have occurred in the United States. Current examples are the Internet and all the high tech companies therein. Whether Google, Microsoft, Facebook, IBM, Apple, or a myriad of biotech companies, the vast majority of innovative new stuff comes out of the United States. Then other countries copy and improve as we move on to the next frontier. Why is that? The answer is risk taking. It is in our genes, it is in our culture, it is in our social systems, it is in our governance, it is in our constitution, it is the life blood of this country. For every Bill Gates, there are 100s of failures, but even many of them get second chances. This frothing does not exist in Europe, Japan, China, Russia, Africa, South America, or Central America for various reasons. For many differing reasons, the entrenched system in countries around the world does not support the kind of innovative frothing we have in this country. As long as it exists here, none can match the USA.
The question about availability of opportunity then is not any of the following:
1. Does luck matter?
2. Does education matter?
3. Does opportunity matter?
4. Does having both parents matter?
5. Does getting a head start from parents matter?
6. Does talent matter?
7. Does working hard matter?
8. Is life unfair?
8. Does “nnn” matter, you fill in the “nnn”?
The answer to all these is a resounding YES! However we should look at the aggregate of opportunity available in this country to prosper versus the rest of the world. We must grade on the curve because no country is perfect (including obviously the USA) and so no country rates an “A” on this score anyway in this world.
If you think there is any place in the world that in the aggregate provides a better opportunity to prosper, then I would suggest you go there. I for one cannot think of any place in this world that provides a better opportunity for all to advance and prosper than the good old USA. Obviously, depending on various factors, some have better opportunities than others. But in any event opportunity exists for all at some level and that is why it is (and last time I looked) still called the American Dream.
Most countries are either:
too corrupt,
have no independent judiciary,
have no independent media,
have minimal entrepreneurial opportunity,
have minimal venture capital available,
have an immature financial system,
have an almost non existent university system,
the wealth in very few hands who control the levers of power,
have minimal rule of law,
have minimal property rights,
have an out of whack economy,
just plain poor,
too agrarian,
too socialist economically,
too controlled by labor – thus stifling growth,
too dangerous,
just plain too lazy,
or all or most of the above.
There is no place in the world that can compete across the board with the opportunity for upward mobility in the good old USA.
Like I said if you know of a place that gives better opportunity for upward mobility and it matters that much to you, I would suggest that you move there.
Very well said. Now I feel bad for sharing my anecdotal story about my own situation just 5 minutes ago. 🙂
Well said, jack. I think we all can agree with this post!
While specialized doctors may make that amount (and we are talking about a minority of doctors) the goverment does not take into the account the over $200,000 most doctors are in debt when they leave school these days. Loan repayment is minimally tax deductible to not at all at higher salaries. After paying taxes and student loans many doctors are left with under half their income.
Amazing! Man of Reason and I are obviously polar opposites as to our politics, but we can actually agree! And this isn’t the first time.
Actually, my politics can be summed up with:
“there is no such thing as a free lunch”,
“don’t throw the baby out with the bath water”,
and the most terrifying words you can hear – “I am from here the government and I am here to help you!”.
Maybe there is some hope for the politics of this republic after all. I wonder if that could happen in D.C.? Not! At least not until we hit an iceberg and discover that we hit it because the guys at the top we trust to know what they are doing, to be thinking of the needs of this republic first, and to be in control – are not; and that there are not enough lifeboats. Every man for himself!
Ales Rodrigues, Lebron James, and Peyton Manning of the Denver Broncos makes $25+ million per year, Russell Wilson of the Seattle Seahawks makes $500k per year. Is that fair, is that right? Should Wilson contribute to this endless series of posts and be as bitter and angry as many here seem to be? Will Wilson ever make $25 million per year? Maybe, given hard work and success, and luck (read that avoid injuries). One thing he will not have, hopefully, is government intervention to adjust the fairness of it all.
And one more thing, what about the 46 other players on the Denver Broncos who don’t make $25 million per year? Where would Manning be without them? Should I expect them to show up with posts in this never ending dialogue we are pursuing here? Should I root for government intervention to “level the NFL playing field”?
Why is Manning making $25 mill? Purely and simply because of his unique talent. Sure he had help, sure he worked hard (doesn’t everybody? – don’t answer that). Could Dick Butkus play QB just by working hard? Could I? Of course not.
Could your average fireman run Apple? Could the $100k programmer in Apple’s development lab run Apple? Of course not, and not because he doesn’t work hard.
The market places a value on everything, including income – get over it. If you get what many of you seem to wish for, a completely level playing field controlled by the government, everyone will suffer. All you have to do is revisit the cold war history of the Iron Curtain countries to see that.
The issue isn’t that successful people should be paid for their work accordingly. The issue is that some really unique jobs pay really outrageous amounts (CEOs in this country being easy targets). And at what level does the outrageous-ness start. The last political campaign created the 1% number, which is insanely low. How about starting it at a sustained $1+ or $2+ million per year, and I emphasize – sustained. Whatever happened to income averaging in our tax code!
It is crazy that Peyton Manning makes $25 million per year and a fireman makes whatever he makes. And that rookie 3rd round draft choice make $500K is crazy high as well compared to the fireman. But life isn’t fair. This could be a rational discussion in these posts if we could just raise the target significantly higher than $400K per year, which in fact is not rich but middle class – regardless of the envy of those who don’t make that.
By the way, the back up QB on the Seahawks Matt Flynn got a $6 Mill signing bonus, will make $5.25 Mill this year and $6.25 mill next year to sit on the Bench behind Russell Wilson. Russell Wilson got a $0.6 Mill signing bonus, will make $0.5K this year and $0.6K next year.
I would think that Wilson should be as envious and jealous as many in this dialogue and wish for the Government to fix it. Not Wilson. What does he do? Focus on his God given talent, work hard, and believe in his own ability to succeed. It is called career focus, not job focus. And that is key, one must think through what is required to succeed in your “career”, not just work hard at a “job”.
It used to be that people in this country realized that nobody was going to give anybody anything. That the focus needed to be on hard and smart work and a constant upgrading of one’s capabilities. That drive to succeed, to provide a better future for ourselves and our family made this country great. It would appear that we are in the process of losing some of that and expecting the government to help us to succeed. It is clear that some of that is necessary, but remember the “key” is you – not Uncle Sam.
Good post Jack. I agree.
Well said Peter and Nerd Hero. I couldn’t resist calling my best friend’s Dad. Jack is a 40+ year retired Firefighter with the Columbus Ohio FD. I asked him in his career, how many fireman had PHd’s or graduated from Harvard, Yale, Dartmouth, etc… He laughed out loud at that question and said NONE. I told him about MOR comments about Chiefs with PHd’s and he resonsded by saying “Yeah, I have heard of these older chiefs who want to make a name for themsevels in the union or national fireman organization. So they get some fancy degree that has nothing to do with the operating of a fire department.”
As Nerd Hero noted, what your anti bloggers noted and what you failed to refute at all, is how ridiculous was your comment that hard word in school and in your career means nothing or at least far less than dumb luck when a person achieves financial success on the job. I did look up Wickipedia and your Nobel prize winning economists and curiously found no articles or books or even quotes by them that say: “In order to be successful in business, your profession and your career, that biggest factor for that success is sheer luck. Hard work in school and on the job mean little.” But I’ll let you cite to some obscure study that you commissioned yourself, conducted by your college freshman son, which reaches that conclusion, so you have some authoritative support for your position.
You are so angry, so envious, so jealous. Too bad you just never got it and apparently never will MOR.
This is getting annoying Rick. I recommend that you, “do a search for ‘Starve the Beast’ to see how we all got to this sorry economic state of affairs”, and you instead search for, “In order to be successful…, that biggest factor for that success is sheer luck….” and then ignorantly say you can’t find a quote or article by any Nobel Prize winning economist.
I then show you exactly how to determine the increase in after-tax incomes for two income levels as a result of the Reagan tax cuts using irrefutable stats, and you refuse to validate the figure for yourself by doing the math. Are you really a tax attorney?
Finally, I give you the names of fire departments to validate my assertion that even some (blue collar) fire service members graduate from highly ranked colleges, with some going on to receive graduate degrees, and instead of checking with the departments I give you, you call Jack, a retired Ohio firefighter to give you an “informed” opinion that he’s never heard of Ivy League educations, nor PhD’s except, “… older chiefs who want to make a name for themsevels (sic) in the union or national fireman organization.” Why on earth would you expect a retired firefighter from Ohio to know about such things? Regardless, firefighters were only examples of blue collar wage earners who you think the top 1%, such as yourself, are more valuable than, and outrank in deserving gratitude from their fellow citizens.
You really don’t want the truth, do you Rick.
So tired to of the characterization that everyone making over $400k is somehow the benefactor of genetics, inheritance, luck, timing or whatever. Such bull**** and completely insulting to the millions of hard working people who have reached the top of their field – of fields that happen to pay quite well. Whether the job is athlete, movie star, CEO, financial planning, doctors, lawyers, etc. – these jobs took a lot of sweat and skill to get to the top. Not saying luck isn’t a factor, but honestly even a lifelong 3rd grade teacher will enjoy their share of luck in their careers.
Frankly, I think it just makes some people feel better and gives them a machine to rage against. Most of the people I know that make far less money than me doing very rewarding jobs like teaching, firefighting, art/music or police work don’t begrudge me the lifestyle my career has provided. We all make choices in life and most of us can live with them without jealousy, bitterness or envy of another group – unlike MOR.
And certainly many of us who are bitter or unhappy don’t look to the Federal Government and all its dysfunction to expect them to “fix” it for us.
Because he believes in progressive taxation such as we’ve had in the U.S. for the past 100 years, and that may differ from your opinion, certainly doesn’t mean he’s bitter, envious, or jealous. Your bitterness doesn’t mean that it’s a natural state for him or any others who disagree with you.
I’m frankly impressed with his quote from Samuel Arbesman’s research paper about how the human mind adjusts to view all outcomes as inevitable. We all delude ourselves sometimes. If we can recognize that, perhaps we can make better decisions.
Any person who started from nothing and became successful i.e. wealthy, had to have incredible good fortune of luck. I do not discount the hard difficult work but, there is a lot more luck involved than you believe. For instance, my best friend and I started at the same job as cleaners for a large corporation, due to the fact that his uncle was also employed there, at a time when that sort of stuff was done in-house and not contracted. I had a high school diploma and dropped out. After about a year we decided that there was no future in that job, and we were 17, we decided to join the military. I decided to get further education by enlisting in army for electronics training. He decided to go infantry. I got sent to a mechanics school by a clerical error. After acing that course, I attempted to get reassigned to electronics school. My friend couldn’t handle the discipline and was released after 90 days. My friend went back to the cleaner job. I was denied re-training and was assigned overseas. While on the way to Germany, I was in a plane crash that killed 70 people. After being layed up for almost a year. I was finally granted re-training in electronics. I decided that re-training was the better route than to get out with a medical discharge and disability. My friend, because of his uncle, got a computer operators job at the same place where we cleaned for a year. I was re-trained and when my enlistment ended, I promptly got a position in the broadcast industry. It was short lived. After six months, I was in a motorcycle accident and broke my wrist not being able to work, I lost my job. From that point on I struggled at getting work but persisted I landed a job with a distributor, where I was happy for almost 10 years. My friend kept his job for the same ten years. When recession hit in the late 80’s I worked for almost 5 years without a raise, while my friend got a pay increase every year. He had the benefit of the large corporate structure and the contacts he made. I, working for a small company didn’t have that advantage. While I struggled to find a better paying job, he worked the system and through his contacts got better and better corporate positions. Another ten years goes by. I get sick and again lose my job. After recovering, I realize that to go any further in my field I would have to get more education. My friend took advantage of his corporate structure and got his education in bits and bites and all paid for by the companies he worked for. I had to take loans. I worked very hard gaining 2 degrees in 2 years, and “luck” would have it 1 month before my graduation, the economy collapses and here I am, 4 years looking for work while he is pulling in 100K+ a year.
So, It just goes to show that it is not what you know, but who you know that gets you ahead in this world. Hard work and effort can be all for naught if fortune does not shine on you.
My friend was the dropout.
I object!!!! I was brought up lower middle class. I went to a state college and graduated in 1975 owing a a little for student loans. I went in to the navy and I paid off the loans and saved about $16,000. I worked for two companies and got laid off. I joined a third and after two years I bought a third of this small company for $27,000. I had to scrimp by to save that much money. Now there are only two partners, I have a BSEE degree and my partner doesn’t have a degree but we have been very successful by not making any mistakes and superior engineering. I don’t quite make $400K a year unless one counts the increasing value in the company.
Success is not luck. It is having a disposable income where one can take a risk. It is working long hours and enduring until a break come a long. One may call this part luck but often we make our own breaks. Then you have to be able to take advantage of the breaks given you.
In business you are competing against many other people. You don’t always have to be the best but you definitely need to avoid being at the bottom that gets weeded out. This part is not luck. It is simply a matter of doing better than the other losers.
There is a saying. You don’t have to run faster than the bear, you just need to run faster than the other guy. This rule applies to business too.
If you are always working for someone else it is harder to make big bucks. The funny thing about it that we, the owners have had discussions this. My father was an independent business man that had his own company. The same goes for the owners and past owners of my company. I think a lot depends in how one is brought up.
In my case there was no security. My father didn’t work for a big company. My father’s company failed but that didn’t deter me. Perhaps I didn’t know how hard it would be. I resent that implications that is it just dumb luck.
Peter N– Not everyone has an opportunity to buy into a company where they work. You happened to be in the right place at the right time. Don’t you think that luck played a big part?
“Not everyone has an opportunity to buy into a company where they work.”
Spike, I made my opportunity by becoming vital to the survival of the company.
“Don’t you think that luck played a big part?”
No!!! I had leverage. I manipulated things and made my opportunity.
There is always luck if you look at the fact that I’ve been healthy, haven’t been hit by a car or had some other huge financial or personal setback. Very true. But let me share my story….
I’m a financial planner – I started with my firm with 25 people in my training class to try and build a business. I did NOT come from money (both of my parents live off of social security right now and have no savings) I studied and learned everything I could about this business while for 5 years I was making nothing. Eventually, I started to build a book of clients who I serviced quite well and started to get referrals. I started giving financial planning seminars which became very popular and subsequent ones filled up even larger. Now, 20 years later, I give 35 seminars a year, and have a presence in a major US city on TV and radio. People call me and ask for my help even though they have never met me or been to a seminar. Business is coming in faster than I can handle it.
Look, I’m really fortunate. Like I said earlier, nothing bad has happened to me that has derailed my career path. And sure you could argue that all sorts of little “luck” has been sprinkled throughout my life…. chance meetings of a future client, etc. But the overriding factor that does determine my success is probably one of two things (or a combination) – hard work or talent. The other part of this is no doubt that I have always operated my life under a long-term plan. Where I am now is no accident, as I have had this entire process laid out from the beginning, and spend countless hours planning the next week, year and beyond.
The point I’m making is that you insult those of us that put an immense amount of time in mapping out a strategy to success and working our butts off to get there. Sure, others may do the same thing and fail – maybe for lack of talent, maybe for a poor plan, and yes, sometimes because of misfortune. But luck only plays a small role. Hard work, education and sound planning always pays off in the long run – in spite of obstacles, luck or “who you know”.
I totally feel for those that have that misfortune shine upon them like the stories below. And frankly, I have the utmost admiration for those that fight through those obstacles.
And Peter N – love your story. Thanks for sharing.
I hope Rick replies, but What facts are you talking about MOR. You identify 4 fireman with PHD’s, one from the 70’s and this supports your statement that “i know many fireman…with college degrees and PHD’s.” Based upon your reply to Rick you heard about 4 over 40+ years, all chiefs. And then you tell Rick to check his facts? Gosh, I would be willing to bet you your entire life savings that less than 1% of fireman nationally have PHD’s or graduated from Ivy League Schools. Send us all some “facts” to win that bet.
What Rick and JB were pointing out is the fallacy that you cite that you have to be lucky to make $250k or $400k or more…that hard work and education aren’t a factor. And know of your purported sources and authorities, including these unamed academics or Nobel Prize winners (or that great source of certain information…Wickipedia), has written any articles that say so.
By the way, where are all your left leaner buddies, coming to your aid here, supporting your statement that luck is all you need, that hard work and education excellence means nothing? You must be standing alone with that statement because most sane people know that your are completely off base and have no basis in what you say….as usual.
And, you know the rest of us can look up things on line too. The West Barnstaple MA Fire Dept is a VOLUNTEER FIRE DEPARTMENT! So of course you will have people of all kinds of professions involved since the work for FREE. Nice try there MOR, you are busted!
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I, too, feel like it is crazy that firefighters and teachers don’t make close to what Wall Street, professional athletes, or Kim Kardashian make. But life isn’t all about money is it? I imagine when all your PHD firefighter friends (lol) took that job they didn’t do it for the money.
This is just more idealistic nonsense. If you have a plan on how to make hedge fund managers make $40k a year and firefighters make $600k, I’d love to hear this.
You again misrepresent what I said. I didn’t say I knew many firefighters with PhD’s. If you want to quote me, at least do so accurately. Nor did I say that “hard work and education aren’t a factor” in success. If you’ve read more of my comments, you’ll see quite the opposite. You, Peter, Rick, JB and others who now are verging on incomes of greater that $400,000 want to discount luck as in ingredient in your success. You want to view yourselves as the smartest, most highly educated, most skillful and hardest working of men and therefore, deserve to be rewarded rather than punished for your success. What I said simply was that many people who work as hard, have similar skill sets and as much education do not have incomes greater than $400,000. Many have even tried to achieve the financial 1% plateau, yet you denigrate their value to society.
So, what’s the difference between you and those who tried and never made the 1% crowd if we can’t attribute it to hard work and education? It’s luck of course. You have been lucky. Few who have the same talents and work ethics can make it to the 1% level; there simply is no room. However, you flatter yourselves into thinking that your financial outcome is only your doing, that it was you alone, and therefore, because you are the backbone of the “free enterprise system” others less stellar than you should pay back the tremendous debt racked up over the last thirty five years since having such valuable people such as you pay for it would punish and discourage the “best” Americans. You delude yourselves.
According to Samuel Arbesman, an applied mathematician and network scientist, and author of The Half Life of Facts:
“Now no one has a problem with the suggestion that future outcomes combine skill and luck. But once something has occurred, our minds quickly and naturally create a narrative to explain the outcome. Since the interpreter is about finding causality, it doesn’t do a good job of recognizing luck. Once something has occurred, our minds start to believe it was inevitable. This leads to what psychologists call “creeping determinism” – the sense that we knew all along what was going to happen. So while the single most important concept is knowing where you are on the luck-skill continuum, a related point is that your mind will not do a good job of recognizing luck for what it is.”
(“Luck and Skill Untangled” wired.com Nov 16, 2012)
Oh, and by the way, all fire chiefs get there by promoting through the ranks through competitive testing (unlike most private industries). The PhD chiefs all start as rookie firefighters. The West Barnstable Fire District is a part-paid department with 4 full time paramedics, a full time fire captain, and not a volunteer, but a FULL TIME fire chief who is a member of the MA Bar. Wrong again NerdHero.
Here is what you said:
I know many firefighters with college degrees (including PhD’s), and some that have even graduated Ivy League schools. So at least owne up to what you write here when you called out by others like Rick and Peter.
And who would know better and can prove better that your statements like advance degreed fireman are as common as the grains of sands on the beach, is false than a guy who worked for fire departments for 40 years.
So many times your “support” for your outrageous comments are some unknown Nobel prize winner, a study by some unnamed academic hack or your own learned opinions.
Let face it: you hate people who succeeded in life due to hard work. And while they might they have been “lucky” to get a specific job to start them on their road to succss, I bet they would have been lucky the next week or the next month too because “you make our own luck” by getting good grades and working hard. And I will never apoligize to anyone for that….
Okay Hero, let me rephrase. “I know of many firefighters with college degrees (including a FEW PhD’s)….” Better? The number of blue collar workers with college degrees or graduate degrees out there was never the point however. I was responding to Surf who, like many of you, put down blue collar employees as uneducated, lazy, stupid and not contributing as much, if anything, to society as those who make more. I simple gave an example of just the opposite. And remember, drug dealers and pimps are in the top 1% too. Moral: Stop the stereotypical bs. The amount someone’s paid doesn’t necessarily reflect actual value. You flatter yourself.
Oh, and thanks for pointing out my undiscovered anger issues with those you know worked harded than I. What insight!
Luck plays a role of course. (I’ll just take the high road with your personal attacks that somehow I’m flattering myself)
However, the big debate here you have been highlighting is the ability – or lack thereof – for people in the lower income brackets to break into the 1%, or for the poor to become wealthy. Upward mobility, if you will….
You have stated in your threads that only 7% of the top 1% come from ‘below’. You have implied that many people are simply “born into” the privilege to be in the 1% either by outright inheritance or by increased opportunity. You have stated that luck plays a major role (along with hard work and education) to getting in the 1%.
What I think I am trying to figure out from your argument is …. just what is your argument? If our goal as a society is to have everyone have an opportunity to move up the ladder in income and wealth, what needs to be done?
First, we must define wealth. As the great article/paper you attached said, that means very different things to different people. Secondly, you could argue that we must have a progressive tax system (which we do). We also have estate taxes which take quite a bit from the wealthy who are leaving it as inheritance, which is where you imply a great deal of the wealth comes from.
In our country, you have the ability – and even tax incentives – to start your own business. Whether it be a thrift shop, restaurant or computer graphics company – you have that freedom. You have a right to a free education. The top 1% pay most of the bill for the tax revenue that pays for this.
My question is – what exactly is your problem, other than simply being condescending to the rest of us and treating us all as though we are not as enlightened as you are?
During our climb up the ladder of success, we have many doubts, knowing that any one of many unforeseen circumstances may knock us down a few rungs or even to the ground again. We know that nothing is inevitable. Once we reach the 1% level, our minds quickly and naturally create a narrative to explain the outcome. Since our perception is about finding causality, that perception doesn’t do a good job of recognizing luck.
Once we achieve a level of success, our minds start to believe it was inevitable. This leads to what psychologists call “creeping determinism” – the sense that we knew all along what was going to happen and “luck” had nothing to do with it. You want to believe that skill and hard work were the sole ingredients in your success, and therefore, if you succeeded to that level, so can everyone else with the same skills and hard work. That is what I mean by, “You flatter yourself.”
The problem is not with my condescension (I’m only pointing out a way we fool ourselves – including me too), it’s with the natural continuation of that line of thought. You see, if luck plays no role, then all those who do not achieve your level of success, either do not have the skills, either because their less intelligent, haven’t studied hard enough, or have some character flaw, or else, they are just not willing to work as hard, as in “lazy”. And, we’ve seen many such references here to the 47% who pay no federal income tax. Now, that IS condescension!
You and others here keep repeating that it’s you, the 1% who pay all the taxes that make this country work. You don’t appear to acknowledge that although you pay 37% of the income tax, you account for 40+% of the nation’s wealth, up greatly in the last thirty five years. You also have never acknowledged that the top 20% of wage earners own 95% (some say 93%) of the nation’s wealth, nor do you want to believe that the bottom 20% pay a good percentage of their earnings in very regressive taxes also. You, nevertheless, think the 1% are taxed too much and see no future problem with this accelerating economic inequity trend.
My problem is that in order to make good collective decisions about the future trajectory of this country, we must all have access to the facts, not the facts as we want them to be, but as they are in reality. Too much money dumped into our political system has made that almost, but not entirely, impossible. That money has created a partisan political tribalism where most don’t care about facts or thinking for themselves, but instead care only about spreading and defending the questionable sound bites produced daily by the various political tribes to which they subscribe. The lack of election and lobby reform is killing our democracy, rendering the voice of the average citizen mute and as a result diminishing equal opportunities for our children.
Peter, I mean no offense to you. Much of what you’ve said here is true, but I must speak up where I differ.
Alaxkid,
I think he was asking me, but your response is a good one. Thanks.
MoR
Why do people with less education and a less valuable skill set believe that they are entitled to live like people who have a more advanced and rare skill set. How many $40,000/yr factory workers do you know can run a publicly traded company? “Fair share” goes both ways. If you don’t contribute as much you shouldn’t get as much. Yet, those who contribute the least benefit the most. How is that fair? What is the “fair share” that someone should take from someone else when that person contributes nothing to the system? Didn’t go to college – that was a choice. Do drugs, drink too much – that’s a choice. Decide to make a career in a knowingly low paying job because you have a passion for it – that’s a choice. Personal responsibility folks….
How much money do you think you can earn without the 40,000/yr factory workers doing the actual work for the company. You are the problem. You think that you are entitled because you can manipulate numbers! Try loading pallets with 80 pound sacks of cement all day long for 50 weeks a year. You have no clue what the world is about. Who’s d**k did you s**k to get your job.
So you think WalMart cashiers that may have graduated HS, which 97% of people could do, should make as much as those that manage the cashiers? And the manager of the cashiers should make as much as the Store Manager? And the store manager should make as much as the District Manger? The law of the jungle and the corporate world is the person that is the most expendable makes the least amount of money. There are only 500 Fortune 500 CEOs that mange millions of people. Go start your own company and pay yourself $1,000,000 if you can generate $100,000,000 in revenues and that your salary is only 1% of the expenses.
Much of what you value as education and valuable skill sets has nothing to do with monetary success and failure. Most people succeed by luck. Neither Jobs nor Gates would have succeeded to such a degree had either been born five years earlier or later, or born on the east coast rather than the west. Both dropped out of college and both happened to be exposed to two or more seperate elements from which they recognized an opportunity.
Picasso once saw a bicycle seat and handlebars, and from a few dollars in junk parts, created a sculpture, a bull that now sells for millions. Likewise, Jobs saw the mouse and the GUI, and put them together to make the Mac. Meanwhile, Gates knew a guy who had created an operating system for personal computers, and when he heard that IBM wanted one, he simply purchased it for $50,000 and sold it to them for millions as PC Dos, while selling the same system to other manufacturers as MS Dos. Genius? Maybe, but I doubt Jobs would have even held a job long enough to gain the skills necessary to move up any ladder in the corporate world and probably would have been considered a failure by your standards.
Much of the world is like that. People with less valuable skill sets do not generaly believe they should live exactly like those with more education, skills, or even luck. A vast majority of Americans not only admire those who succeed honestly, but also believe they can succeed as well with hard work and perseverance. That’s unrealistic of course, since only 4 to 6 percent of those who believe so will ever break into the top 1% of income level during any three year period as adults, but we all have been fed the “American Dream”.
Those at lower income levels are becoming more aware of the income inequities perpetuated by tax policies of the last thirty five years where, even though productivity increased by 40+%, they saw little of that gain in their paychecks. While the CEO saw his take home pay on $10,000,000 (2013 dollars) increase by 136% during Reagan’s term of office due to tax cuts alone, the average income earner saw a 2% reduction. By 2013, the average worker has seen little increase in real dollar terms, but the CEO has experienced a explosion in salary and benefits. So have the top 1%, 3%, 5%, and 10% to lesser degrees respectively.
There are many, many highly educated and skilled people in blue collar jobs or making blue collar wages for one reason or another, and many do things that most of us consider to be very valuable. Let me finish with this example. I know many firefighters with college degrees (including PhD’s), and some that have even graduated Ivy League schools. One fellow who graduated for Penn has a boyhood friend that graduated from Harvard in physics at the same time. His friend now makes millions designing algorithms for super computers to trade stocks in nanoseconds on Wall Street. The firefighter makes very little in comparison. Who job really is more valuable to society?
So you are saying this world is dependent on technological advances based on when someone was born or could have been born. If Hitler was born a day earlier he might not have turned into what he was. Well you can coulda, shoulda, woulda hypothetical reason the world to death. The reality is Gates did something nobody did and put a computer on every desktop. He still had to learn to run a company and grow it into a multi billion, multi country company. I don’t see too many people just coming up with inventions and changing the world. I guess you think Steve Jobs wasn’t a genius if maybe he had gone to community college and dropped out. Some people just have a vision. And let’s stop comparing fire fighters to CEOs. They both have different skills and firefighters sit around for a majority of their working day waiting for something to happen. They are paid by the public so their salaries will always be restricted. Do you really want your firefighters to be paid $600,000 a year? There are thousands more firefighters than there are CEOs. Firefighters don’t necessarily contribute to society by making us more productive. They haven’t invented anything. so let’s stop that comparison.
You keep fixating on 1% of the population that no matter how much they are paid don’t impact the lazy and illiterate person that dropped out of high school and maybe got pregnant or got someone pregnant and had to find a low paying job. No, you don’t have to have gone to college, but you need an internal drive to do something with your life. I can pretty much bet there aren’t many PhDs working at a desk inputting accounting entries the same way there aren’t many people with ZERO higher education being the CFO of a company. Yes, there is a good old boy network between BODs and companies, but you still need a pool of people out there that can handle the job. Having a CEO take less in stock isn’t going to improve the skill set of the workers he employs. If Bob owns a car wash franchise of 500 car washes, the people washing and waxing the cars aren’t going to be moving into the corporate office anytime soon. They don’t have the skills and it isn’t the job of the company to put all their employees through college, even though most won’t even be able to get in. Assuming they could even get a GED.
So to summarize, your lot in life isn’t determined by your horoscope and being born into a certain part of town or the year of the century. People make themselves into something because they have the drive. You wont’ become a CEO or be paid $400,000 by sitting around taking welfare.
Do you have to concentrate a great deal to misunderstand what someone else says JB? I said nothing about technological advances having something to do with anything, and said nothing about firefighters making $600,000, nor did I say anything negative about Gates’ or Jobs’ accomplishments. I take nothing away from their hard work and perseverance, and obviously they prove that a college education isn’t necessary to gather the skill set to run highly capitalized multinational company.
What I said was that there are a lot of people who are as bright, better educated, and have the work ethic and perseverance also, but never achieve incomes of even $400,000 per year. That doesn’t mean that they are less valuable to society, only that they choose to do something more intrinsically rewarding or, if they were in business, didn’t have the right connections, enough capital, the right opportunity, or simply the luck. Although it’s somewhat true that you make your own luck, it doesn’t negate the fact that life really is a crap shoot (I never gamble btw).
You are right that those who are stupid, lazy, drop out of high school, and get pregnant limit their chance of joining the top 1% to just about zero, but that’s not absolute either.
However, this is really about your not wanting to pay any more income tax and you make the excuse that the extra amount will only go toward enabling the lazy miscreants to not work, as if congress has passed additional welfare legislation (which, of course, it has not). Perhaps if you can convince us that it’s really “good” people like you and Rick verses the lazy faceless, nameless lazy hoard, we will side with you in this argument. So just who is that “hoard”, that 47% sucking the lifeblood from the backbone of American free enterprise and your heroes, the entrepreneurs?
Well first of all, they’re the risk takers, the entrepreneurs who failed. Without a safety net, many fewer Americans would take the risks to try something new, and we would cede innovation to countries which do provide for those who fail. Secondly, they’re our parents and grandparents; those who are guaranteed not to starve because of Social Security, and not to die from injury or illness because they have Medicare. For 34%, SS provides at least 90% of all income. Then they are our soldiers, the working poor who get paid so little that should they have a family, they pay no taxes. And then we have the non-unionized American workforce like we see at Walmart. They are paid so little that the company actually gives classes to show them where they can get government help to supplement their meager wages. And, of course, there are the disabled and mentally ill we see in homeless shelters, and sheltered under bridges or in cardboard boxes downtown. Then, there are the recently unemployed, etc., etc. I could go on, but hopefully, you get my drift.
There are many reasons for Americans to receive government aid, or to not pay income tax, and being “lazy and illiterate” counts for a very small percentage of that even though you constantly beat that drum. You are wrong.
Most of those who don’t pay income tax are living hand to mouth and in a world of great stress. If you are in the top 1% of wage earners and are fortunate enough to pay 39.6% on income above $400,000, count yourself very lucky. To all others you can secretly whisper, “There but for the grace of God, go I.” Grace… or was it Luck? No matter.
There are many, many highly educated and skilled people in blue collar jobs or making blue collar wages for one reason or another, and many do things that most of us consider to be very valuable… His friend now makes millions designing algorithms for super computers to trade stocks in nanoseconds on Wall Street. The firefighter makes very little in comparison. Who job really is more valuable to society?
________
how much should a firefighter be paid? They have skills putting out a fire and rescuing people. Bill Gates changed the world even though you think he just stole the technology. Firefighters help society, but they aren’t allowed to be capitalists. They can’t just go and invent something and sell it to the outside world. They live under gov’t restrictions and are gov’t workers. They have a union so the union gets them as money as possible and to you, it still isn’t enough. How much should a public employee make? We have to have firefighters, we don’t NEED iphones, but Jobs created something that millions want and the consumer has the choice to buy or not buy the product. Millions of people fail at inventing something and becoming a billionaire. it doesn’t stop many others from trying. it isn’t luck that brings an invention to the market. It is education and hard work. There will always be jobs that don’t pay as much as other.
Twenty two years ago, I went to Harvard to take David, the physics major, out to lunch. We had a great visit and I came away thinking that if anyone could discover a way to economically create fusion as an energy source, it was this young man. He was absolutely brilliant besides being a very good guy. I’m very happy for his financial success, but at the same time, the country lost out to an extremely screwed up and entrenched value system which rewards speculation over industry. This is mainly because the monied interests who are rewarded by skimming the profits in stock movements from (slower) investors, can prevent legislators from discontinuing such practices. What David does now has absolutely no real value, and there are many just like him. The point was that just because you make millions a year, doesn’t make you more valuable or translate into some socially redeeming ideal that we should all worship.
I have no problem with how much firefighters, Bill Gates, or anyone else is compensated. I do advocate collective bargaining and the ability to communicate between labor and management however. Whatever comes from that process is O.K. by me.
I also believe that few people are indispensable. I mean to take nothing away from Gates or Jobs, but had they not been in the right place at the right time, with the right knowledge and connections, and then capitalized on the opportunity, others would have done the exact same thing. These were ideas and technologies who’s time had come and could not be stopped.
How can anyone have a meaningful conversation with Man of Reason or any of these left leaners, when they start with the following premise:
“Much of what you value as education and valuable skill sets has nothing to do with monetary success and failure. Most people succeed by luck.”
When you start with such an absurd statement you know that the rest of these people’s diatribes are going downhill fast.
How dare you insult all the people that post to this site who tell their stories of rising up from little or nothing, thanks to a committment to education and hard work. You think there is no or very little condition to success on the job or in your profession or business because of education success and hard work and committment on the job? It is pointless to even consider a dialogue with you when your thinking is so far from reality.
What is really sad is that fundamentally what needs to change are parents installing those values (good grades and hard work) on their kids. Until that happens the “Plight” of the 47% or the 49% (in 2012) or even the 80% will not change. You and your minions are simply supporting the continumation and growth of a welfare state where the government is responsible to for a person’s status in life and is there to make up for bad personal decision making, a lack of drive and committement and fundamental laziness.
BTW, I know lots of firemen too. I actually have represented 7 of them and my best friends Dad is a 40 year retiree. NONE OF THEM HAVE PHD’s. And that’s not to insult what they do. But we all contribute to society in different ways and there is a market in capitalism that drives individual compensation. Sorry, that’s the way it is. If you don’t like it, follow Dennis Rodman to North Korea. You could probably be appointed Minister of Education or Financial Development there with your thinking. On Second Thought, maybe not….you might be too conservative for Kim Jong Un.
Rather than being angry and insulted Rick, why don’t you check out the facts I’ve presented.
So you know plenty of firemen too and none of them are PhD’s. To you that means there are none, right? Then, call the City of Santa Fe Springs, CA and ask whether, in the 1970’s, their fire chief wasn’t a PhD. Santa Ana and Atlanta had PhD chiefs too, and the first commandant of the National Fire Academy was also. I also know that the current chief of the West Barnstable Fire District in MA, an attorney, is a JD. Check it out.
Aren’t you a tax attorney? Therefore, I assume that you can do math. Then check out what I said was the real increase in take home pay granted the CEO who made the Dec 2012 equivalent of $10 million during Reagan’s presidency from 1981 to 1988. You can adjust the $10 mil to the CPI using an on-line government site for both 1980 and 1988, and then retrieve the tax tables to figure taxes owed on the AGI. Then simply deduct the taxes from the AGI to compute net (take home) income and see what the difference is. Now do the same for a $50,000 equivalent income.
Oh, and while you’re at it, do a search for “Starve the Beast” to see how we all got to this sorry economic state of affairs. Read Wikipedia or any Nobel prize winning economist on the subject and not some partisan hack. You may be surprised.
Check it out or complain about us “lefties” elsewhere. If you don’t know the facts and are unwilling to learn Rick, you really can’t have a meaningful conversation.
MOR – you just aren’t making any sense – I think that is the problem. You just “seem” bitter (and admittedly this is my personal takeaway from the way you are wording your responses) about the fact that some people earn far more than you for doing what you deem to be less socially redeemable work. Fair enough – I have no problem with you feeling that way. But the solution isn’t to tax these people more. The system you crave is already in place – progressive taxation. You still haven’t told us EXACTLY what you would do to fix this – i.e. to keep the CEO from making $20 million and their employees making more than $40k.
Man Of Reason –
“Most people succeed by luck”
Can you even imagine a world where everyone believed this ridiculous statement?
Peter, you too misunderstand what is said and therefore can’t make sense out of it. Let me clarify for you if I can.
Because people disagree with your opinions, doesn’t make them bitter although those opinions may upset you. I feel no bitterness at all, although I occasionally get annoyed by people who purposely pretend not to understand what’s clearly stated, or veer from the subject to make personal attacks.
I “crave” nothing. I “advocate” progressive income taxation because, like a vast majority of Americans, I believe it’s most fair, and compensates somewhat for all other taxes which are regressive.
I “earn” nothing. I’m now comfortably retired. I’ve been fortunate enough to befriend many people in the three states where we’ve lived and still keep in touch with many, including wealthy friends past and present. Frankly, can’t imagine being envious, jealous, or in any way bitter because they make more than I ever did. Good people are good people regardless of income.
As far as keeping the CEO from making $20mil, that’s not my issue and I don’t really care, although I would like stockholders to have more say in executive compensation set by sometimes incestuous corporate boards. But that’s another issue for another time.
What I advocate is an understanding of the facts about the options we face as a country to try to provide for our fellow citizens, including the “least among us”, while building a sound economy which will provide the opportunity for my kids and grandkids to the extent they want to achieve. I believe we’ve lost much of that in the past thirty five years due to insidious ideologies and subsequent legislation and court decisions which rob the average person of self determination by reducing his voice and power in favor of large corporations and a few very wealthy people who’ve purchased our legislators on both federal and state levels.
Finally, you quoted, “Most people succeed by luck” out of context. The previous sentence says, “Much of what you value as education and valuable skill sets has nothing to do with monetary success and failure.” I was addressing the success of the top 1%, and didn’t say, “All of what you value….” , or even “Most of what you value….” Perhaps I could have been clearer, but what I was saying was that when you get to the rarified 1% level, there are many people with the same skill sets, education and desire as you who never make it. The difference is luck, although our egos want to hear something different.
$400k..well just add Hollywood and the music industry to that list…..also professional sports and the upper management in the auto industry …… many people make over $400K…….sadly most people make under $40K and that is where any tax…..even a 1% tax hurts the most ! IMHO……..
There aren’t a ton of people that are paid 400K with zero skills. Let’s remove the Khardashians and those type of people that somehow suck the life force out of people. You have a skill someone is willing to pay for. Yes, CEOs probably make too much money, but it isn’t like that money would get re-deployed to the workers just because he makes less. The accounting clerk isn’t going to get a $20,000 a year raise just because the CEO is paid less money. Personally, I think if a company is going to give out stock options, those should be limited and every employee should be able to have their 401K match in company shares. Too bad many employees don’t realize they can save taxes by contributing to a 401K and they probably get free money in a match. Contribute $100 a month and you get $100 from the company. That is a 100% return on your money.
It really bothers me when people act like everyone who makes over $400k doesn’t deserve it. Most people who make that kind of money have skills that society wants (doctors, dentists, financial planners, athletes, entertainers, management, lawyers) and is willing to pay for. Or they are small business owners who took a great deal of risk to start their business….. and are also providing people with something they want. Why the vilification of these people? Just because of the few sycophants?
I’m not sure I even understand the crux of the debate here. Is it that the “rich” should pay more? Well, they do – they pay a lot more.
Specifically, let’s try and narrow this down. If you were in office right now and could ‘make the rules’, what would you do to our tax code? Eliminate deductions? Flat tax? Raise the top rates much, much higher?
Understanding this in order to pay for everything our government is currently doing, we need about an additional $1.3 trillion in revenue. Let’s leave cuts out of it for a second …. how would you raise this kind of revenue specifically? And keep in mind that you have to do this without making people starve or choking the economy.
I am all for eliminating certain deductions like the mortgage deduction and student loans. You don’t buy a house based on the tax deduction and you don’t choose to go 100K into debt hoping for that tax deduction on the interest. The charity deduction should stay because for whatever reason, people feel better knowing they are getting the deduction while giving money to a worthwhile cause. The gov’t should get out of the charity business.
In my opinion there should be no interest on government student loans. The corporations should train their own workforce and not rely on the government to pay for their benefit of an educated workforce.
How about the gov’t just get out of the student loan business. Why should they be giving out loans to kids that aren’t smart enough to figure out getting 100K degree to get a 32K job isn’t worth it.
I keep reading about liberals wanting to forgive student loans. Wait a minute! I paid for my own college. My wife did too. We paid for our first two kids. They owe nothing. My third kid will owe nothing.
So what does forgiving student loans mean? Free scholarships. And what about everyone who paid off student loans. Or who didn’t aks the government for student loans?
Oh, I know…no rebate…no refund…. As usual, we get penalized…again and again and again……
But I guess we can feel good about it. Maybe all these people who need student loans would feel better about their lives if they put themselves through college thru hardwork and/or with the help of parents who took the initiative to save for their children’s education.
But that’s asking way to much in this society, isn’t it?
If the government quit guaranteeing or loaning students money for college, many fewer would be in school. And JB, it wouldn’t be just those who chose the low paying majors either. It would also be a loss of Math and Science majors that are needed for America to compete in a global economy. The key word here is “compete”. Both European countries and China compete, not through loans which burdens the young so greatly, but by actually paying the those so inclined to continue in post secondary education and graduate school. The U.S. has wasted so many young minds who drop out, even with loan they can’t afford to pay back, that it’s appalling.
Oh, and Rick, the “liberals” are not the only ones recognizing the unfairness in loans which are treated so differently than all others. Private rates are userous and much greater than you pay for mortgages and auto loans, plus, there is no protection provided by bankruptcy laws as for all other loans. Some colleges, especially the for-profit ones, talk these young inexperienced people into loans they know they will be hard pressed to pay back. The kids drop out after a couple of years and into a minimum wage job and a crushing debt burden, the for-profit has its profit, and the loan originator has a government guarantee and can lose. What a deal! -Except for the ex-student.
It is because the entry level pay for a college graduate is 32K. It is because the corporations expect their workforce to be educated. How? They don’t care as long as they don’t have to pay for it. It is because the working class has no way of getting to the next step without higher education. With the current ideology of corporations only catering to their stockholders with no regard to their workforce is destroying this country from the top. They expect the government to provide for the education of the masses. While they take the same student loans from the government, they don’t believe that they should pay for subsidizing that same education that they and most of their employees got. Abandon the subsidizing of higher education from the government and force the corporate world to pay for their own workers education. The government can no longer support the abandonment of the corporations. If the corporations want a highly educated workforce, they must pay for it themselves. In my opinion it would be more effective and less expensive to provide their own education and training to their workforce than having to pay more and more taxes toward education costs.I am certain that the cost of education would come down while the benefits as well as employment would go up. It is the fault of the corporate way of thinking (profits before anything else) that is destroying American workforce and the American way of life.
The economy is not unlike a tree. It grows and is nourished from the bottom up. If you keep trimming all the branches and pulling off the leaves it becomes more difficult to get nourishment and unable to convert their raw materials to sap. Unable to grow, eventually as all the sap is sucked up to the top leaves, causing it to topple, and die due to lack of support from the bottom.
-Jeff Magnell
Jeff,
Exactly how would having corporations pay for college educations work? Would they sponsor students and then own them? Or would they pay taxes based upon the number of graduates they have, or something else?
No, they would contract the employee like any other business deal. Like they did in the old apprentice days, or, like the military. They train you to do a job and you are contracted for a period of time to do that job. That way the employer has a stake in the welfare of the employee and the employee has a stake in his own destiny and takes care of the employer. The employer would then gain a tax deduction for each graduate. As long as the corporation continues the employee’s education, it is eligible for the tax deduction. Drop outs would not have the benefit of social security or welfare.
Once trained or educated, how do you keep other corporations from offering more and hiring them away?
The same way they do now!
I would eliminate deductions and just have a flat tax. I mean all deductions. The tax rate would be such that it is revenue neutral.
Fat chance of this happening. There would need to be some grandfather clauses but that would be the first loop hole.
People should do things because there is some positive benefit from the action, not because the gov subsidizes the action.
Of course, that means you’d eliminate the mortgage deduction for example, but would you also eliminate the company car or even the company jet? How about the company expenses for the annual Christmas party? The company cell phone you use for personal calls? And those meals out to promote your products, and the green fees where deals are closed on the last tee or the 19th hole? What deductions are you speaking of, and who would pay more tax and who less?
The Christmas party is an expense like buying paper towels. You don’t get to “deduct” the Xmas party from your taxes. Not having the Xmas party would increase your profits. Marketing costs are expenses as well. How you choose to deploy your marketing expenses on billboards or a golf course is a philosophy of a company. I know plenty of people that have no desire to golf and don’t have the time to learn.
Companies use a private plane because time is money and no CEO/CFO that has to travel around the country during a week is going to depend on commercial airlines. A CEO can come and go as needed and not be dependent on United’s flight schedule.
Also, we are talking about personal income, not company bookkeeping. The whole IRS tax code being revamped still won’t change a workers salary.
How does the IRS tell the difference between a Christmas party for your coworkers given by your wife who just loves to have parties, and one given by your business to reward your employees for a good job and, hopefully, raise morale and productivity?
This is off topic a bit.
I would eliminate deductions for the company jet. I think my reasons are clear. People should do things because there is a benefit to doing them, not because they are subsidized. BTW, in the state where I am in we don’t have an income tax on profits. Instead there is a very small tax on the gross income. There is no need to keep track of deductions for the state. Taxes would be much simpler to compute. Money would flow to those things that the market finds beneficial, not to those things the gov wants to subsidize.
The market may not be perfect but it is better than the gov.
There are some that claim that my idea of a tax on the gross is not fair to low margin companies. For instance, today one can make $10M and have $10M worth of expenses and pay no taxes whereas under my scheme the company may need to pay 2% or $200K. My reply is that any company that has $10M expenses is effectively using $10M of resources. This company is inefficient. Companies that make $10M and use $9M in resources will still make $800K after paying $200K in taxes. This tax scheme rewards efficient use of money/resources.
Another benefit would be that the companies can not shift their profits.
The state where I am in has a tax on the gross that is in the range of 1.5% to 2% the last time I looked.
What part of “ALL” deductions don’t you understand!!
My comment on my tax rate is real – not embellished or exaggerated. I actually pay that kind of tax every year. The tax code is way too complex to change one schedule and have a group of people get tax breaks or increases.
Oh yes, and since we are caught in the Alternative Minimum Tax, very few deductions are ever counted. We are not allowed to deduct state tax from federal, and many other deductions are limited.
I can back this up too. I make that kind of money and pay that kind of tax rate as well. The whole idea that I should pay even more just baffles me when I think of all of the lives I impact with:
– direct employment at my job
– “indirect” employment at my home (cleaning people, contractors, etc.)
– considerable charitable giving
– the enormous amount of tax I am already paying
– volunteer hours
– other ‘donations’ and help I provide to friends and family
I really wish some of the naysayers could try and put themselves in our shoes. I am trying to do the right thing all of the time and “pay back” to my community. Why? Because I can and I realize how fortunate I am to be in such a comfortable situation. Sure, it took years and years of hard work (I worked 80-90 hr weeks for $20k a year for 3 full years – others would leave at 5:01, while I would stay until midnight many nights)
It really is offensive to tell someone like me that I’m not “doing my fair share”. How about the idea that the government isn’t handling the trillions we already pay them correctly? Seems to me that is more of the issue.
“Those individuals making $400,000 per year are in the top one percent of the top one percent — ”
Even though they took back the second part of this statement, the first part (above) is wrong. You need closer to $1M a year to be in the top 1% of earners.
And to make it an issue of raising some of the income of these people from 35% to 39.5% is nonsense too – perhaps $400B over 10 years. Whoopee! I earn $600K a year (and am not ashamed of it). My total tax bill in 2013 will be about $280-300K a year (Federal and State). That’s 50% overall tax rate. If that isn’t a “fair share” then I don’t know what is!
Why do you pay 50% when Romney pays 13% plus state tax of less than 6%?
I find it hilarious that people really believe all of these numbers. You really think that the 1%’s can save the country? They’ve been giving everything they got for decades and We The People continue to blow out their money on wars and failed government programs. Shame on the President. Shame on Congress. Shame on the People. Crunch the numbers yourself. Taking away at least $20,000 extra per “rich dude” to raise about $70 billion a year will save the country? That $70 billion is like spit in the ocean. Our government overspends TRILLIONS of dollars regularly. One TRILLION is 1000 BILLION. If you’re losing 4 quarts of blood every hour and you’ve just bumped up your IV to refill you at 1 quart every week now, you ain’t gonna live long. CONTROL THE SPENDING!
The tax rate needs to be fixed.
If you work 40 hrs a week, and earn 100k per year, then the GOVT takes 33k.
If you make 100k from investment, then the GOVT takes 5k.
If you win 100k at a casino, then the GOVT takes 50k.
Corporations hide profits. If companies funnel profits thru offshore accounts, then let them declare their business losses and write-offs in those offshore countries. If they declare 10K in profits in AMERICA, then they can only write off 10k in AMERICA.
The tax system does need to be fixed.
If you work 40 hrs a week and make 100K a year and pay 1/3 in taxes that is way too much.
If you make 100K from investments then the government takes 15%. Show us where the one only pays 5%. Romney paid 13% because he gave a lot to charity. Back up your claim.
Corporations don’t hide profits. They take the deductions they are entitled to under the law. If they don’t the stock holder would kick the managers out.
I don’t know anything about off shore accounts yet. Again I want you to provide a link to prove your point.
Cesar: Please do yourself a favor and get the facts. If you are married with only the standard deduction to take here’s where your Federal Income Taxes really fall:
Work 40 hour and make $100,000k Pay about 12,000 (12% of gross)
Earn $100,000 investment income:
Any interest or dividends taxed just the same as wages
Short Term Captial gains taxed just the same as wages
Long term Capital gains taxed at max 15%
Win $100k in a casino. Pay about $12,000 just the same as wages.
Note: Most people with $100k in income will have itemized deductions in excess of the standard deduction amount, so their taxes will even be lower than what I calculated above.
You really should not rely on all the scare tactics and class warfare baloney that the Dems and left leaners spew forth to direct envy, jealousy and hatred at people who have been successful. How else could 10% of taxpayers pay over 70% of Federal Income Tax (Source: IRS report).
Hahaha, paying 12% tax on $100k, you’re funny.
Mike–
Rick is correct. If you earn $100,000, file jointly and have no deductions, you will pay $12,191 in taxes. That is 12.2%.
Its interesting that when someone makes a comment like this (“HaHaHa, paying 12% tax on $100k, you’re funny”) that is so wrong that NONE of the left leaners on this Blog rise up to try to defend the writer. That probably because the left leaners really like people to be ignorant and in the dark about the truth about taxes, who pays, who really pays the fair share (and who doesn’t).
It makes me sad and frustrated at the same time to read so many of these uniformed comment in these posts. People, take the time to really learn the truth. It took me 3 minutes to figure out that the tax numbers that Rick quoted above were right.
My wife’s w-2 says she made 284K and paid 73K in taxes. That is 28%, not 12%. Don’t know how you get your info. We don’t have a mortgage so our only way to get above standard deduction is our property taxes and our charitable giving, and even with those we are getting phased out and only get about 75% of that. And she is a Tax Director with 75 people under her. Don’t you dare tell me she doesn’t work hard for what she makes. She could have been a partner and choose not to due to the even more stress it would have been to her. We are just fine making 360K and saving 40% of our income. We didn’t buy a McMansion. We don’t drive expensive cars. We eat, drink and travel to give back to the economy. If thousands of people like us quit going out, restaurants would close and people would be out of jobs.
Here’s the Federal Income Tax result for you JB.
Married Filing Joint:
$280,000 in FIT taxable income $68,712 or 24% (Your wife’s W-2 shows withholding and not tax to be actually paid with the form 1040).
$360,000 in FIT taxable income $94,112 or 26%
Note: the $80,000 you contribute to your family income generated an additional $26,000 or about 33% Federal Income tax on your comp.
Here’s an interesting exercise;
The Married Couple who earns $100,000 pays $12k in FIT.
The Married Couple who earns $400,000 pays $109,000 in FIT.
Funny, you’d think that the $400k couple would just pay 4 times as much as the $100k couple…not almost 10 times???!?!?!?!
But remember folks, the $400k couple are not paying their fair share and we need to tax them even more and more and more and more…..
The only evil lobbyist is the one you don’t agree with. There are lobbyists for all sides.
If I did make this much I sure wouldn’t tell anybody…there are alot of ways to make it…it just takes about 20% of it to pay someone to keep it for you…i.e., tax advisors, legal advice, the luck whammy and your Mom…
Trust me, I know…LoL…
How in the world does the EIC “Lift” you out of poverty?
2. Earned Income Tax Credit. The Earned Income Tax Credit is for low to middle-income wage earners that has lifted nearly 7 million people out of poverty.
I have to pay “because I can.” Wow. That’s the kind of thinking that made this country great, when it was great sadly.
And actually the phase outs for the real tax loopholes is far above the poverty line, even in excess of $140,000 of AGI in many instances.
No, I never had to make those tough decisions. But I did make decisions to work hard in school, get a degree in an area where I would be employable. Work hard on the job, Invest in myself, only owe on my very reasonable house, only had enough children that I could support and put through college, etc… so I didn’t have to rely on government to support me. A fundamental law is for every reaction there is an equal reaction. Same applies with decisions people make. Don’t want to work hard in school. Don’t want to get a degree. Don’t want to do what’s necessary to hold a good job. Decide to spend more than you earn and generate lots of debt? It should come as no surprse that you might not do as well as me. So don’t blame people like me for your lot in life. You made decisions that put you where you are. Either live with it or act to improve it. I am sure I am paying for any number of free jobs and free tution programs that you can access to improve your life.
One great misnomer of you left leaners is that all the 10% or even the 1% were born that way. My first job was in a market, then a warehouse, then a camp, then a store and finally after school I was hired and had a cubicle with lots of other newbies. But what I did to get to this humble place, is what YOU need to do, not be calling us greedy and expecting us to pay for the result of your and many other’s bad decisions.
I made those decisions as well as you. I have a degree. I had a career for 25 years until my health deteriorated. Now that I’ve recovered some, I am 5 years behind the curve and struggling to find work in my industry or any industry in this economy. Thinking that a degree would be a step towards making up that deficit, returned to academia to earn 2 degrees in 2 years. just when things started looking up the country’s economy goes bust now with no job for 4 years and a 40+k in education loans I have no way to pay off or even start to pay off, where does one turn. I may have experience and education but for the life of me no way to get work because the corporations won’t hire anyone who is not currently employed, my former industry changed from small business to large corporate entities, which requires non accredited “industry certification” that you have to pay them out of pocket, which creates a catch 22. No job, no money to get certified, no job because you are not certified! I am overqualified for most of the positions I apply for so most employers must believe that I will not be satisfied with their paltry offerings with no benefits and heavy labor or that I must be too old to do the job.
Jeff, welcome to the world of the self-employed!
7% of the top 1% came from below. The rest were born to it. Not hate at all, just fact.
Sounds like quite a few excuses here, Jeff. Look – I respect that life has dealt you some blows and you have many obstacles in your way. But you can do it anyway! And really, what is your choice? Life will throw all sorts of road blocks in your way, but blasting through them (no matter how difficult and painful they may feel at the time) is a MUCH better idea than waiting for the ‘rich to pay more’ or for the government to fix your life. There are many valid points you make, but also many very flimsy excuses. Again, don’t want to sound unsympathetic – but every day I’m inspired by people like you that continue to fight for their piece of the pie. Don’t give up…. The government and our tax code won’t fix your situation or even help it.
As for me, my only income comes from the VA in the form of disability compensation of 255.00 a month. You try living on that. I am not living, I am surviving! If it weren’t for family, I’d be living in the street because I am not entitled. I would rather starve than except government handouts.
What I don’t understand is that some of these large corporations are taking more and more capital out of the economy and not returning it. They are investing in short term returns that make them large amounts of money that could never in a hundred lifetimes be spent. Why for instance would, in 2011, Robert A. Iger, the CEO of Disney earn 33,000,000 in income, dividends, and bonuses, while at the same time laying off 1000 employees and taking away employee benefits. Corporate loyalty has been entirely removed from our society. Why has the 100 highest paid corporate CEO’s earned over 3 billion dollars, a 380% jump in income, while dumping employees, benefits, or outsourcing jobs overseas.
The average worker is losing all kinds of benefits and pay a much larger percentage of their income on taxes. Like I said before, It’s not the amount of taxes you pay, it’s the amount of money you have left after taxes. Tax on dividends has been as high as 90% in the past but that never stopped them from investing. The gripe that some make that their earnings are double taxed because the corporate tax and dividend tax is an unacceptable argument. The reason is because the individual is exempt from personal liability if the corporation fails. If a person doesn’t want to accept that he/she can always UN-incorporate and accept the consequences of fiscal liability.
In my humble opinion all dividends should be taxed at twice the rate of income in the bracket that it is earned. For every dollar of net profit a company makes, 50 cents should be distributed directly and equally to the employees with the rest to the investors. That one step could turn this country around in record time and reduce everyone’s tax burden.
This is about the most intelligent argument for “the other side” that I have heard on here and I appreciate you taking the time to reply. People need to realize when they start the 1% vs. the 99% argument that the enemy is NOT people like me (and JB) who make between $250k and $1m a year. Raising taxes on that group is counterproductive in my mind as it does impact the economy directly as that group does tend to put quite a bit back in (hiring, charity, etc.). When you say “the top 1%”, the cut-off is around $350k.
It’s the CEO making $30 million that is the issue. These aren’t always people that started small businesses either – these are people who were hired to run a corporation.
The irony is that I think corporate america has been hoarding their cash due to the uncertainty in the economy and the gridlock in our dysfunctional government. But I do love your idea of forcing (or at least tax-incentivizing) corporations to put their profits back into the economy.
Well said.
MOR – this is just a flat out misstatement. (That 93% of the top 1% came from inheritance)
First of all, we are talking about the top 1% in EARNED income, correct? That is what this article was about. You are telling us that 93% of the top earners inherited their income? That makes zero sense. While some people do have high earned income from inherited investments, most of the top wage earners didn’t “inherit” their jobs.
If you mean the top 1% in wealth, this is also untrue. That number is much lower than 93% – just a simple googling of this will show most studies put that number around 14-15%. Would love to see a reference for these stats.
MOR’s facts are his own conjecture. I am glad that you pointed out that it is impossible that only 7% of the top 1% of earners “came from below.”
BTW, the top 1% in income starts at $369,000 in Adjusted Gross Income. (Source IRS). I have 5 partners who reach that level and NONE of them inherited it.
Perhaps MOR is saying that “inheritance” means having parents who encouraged education, hard work, etc…. Or maybe MOR’s “inheritance” means that these individuals decided for themselves to study and work hard and then rose to this level of income.
Either way, as you point out, just another effort by these left leaners to vilify successful people or to create more class warfare and envy by saying that 1% people dont’ deserve it.
By the way, the IRS states that the top 10% of earners starts at an AGI level of $169K. I was surprised how low that number is, but it just goes to show you who is really paying Federal Income Taxes, who is paying their fair share and who is not.
Incomes swing wildly throughout our lifetimes and therefore, what I quoted was for the top 1% of the wealthy, as in net worth. The 7% who are currently in the top 1% from below, are not the same 7% of years earlier as wealth ebbs and flows. Same with the other 93% who’s parents came from the top 1%. But wealth is much more stable than income.
Although many at that level do inherit their wealth, many don’t have to. The opportunities provided children are much greater, the higher up on the wealth scale their parents are. Mitt Romney reportedly didn’t use an inheritance to build Bain Capital, but he had the opportunities for fine prep school education which led to the best higher education and Harvard law.
His social circle included many wealthy and well connected families from which to draw money and talent. The wealth influence on legislation in order to be able to maintain family wealth cannot be underestimated also, and while more sons and daughters retained their status as part of the 1%, fewer from below had room to displace anyone, unfortunately at the expense of Meritocracy.
As far as studies about the upward mobility of income in America, try here> http://www.columbia.edu/~tad61/riches112805.pdf
This is all hypothetical and idealistic and has no basis in statistics. Just to clarify, you stated that only 7% of the top 1% (now clarified as net worth, not income) came from ‘below’. You tried to widen your definition by saying that the 93% who “inherited” their wealth may not have inherited it directly, but came from a ‘position of privilege”.
I would actually say that if someone aspired to be at the Mitt Romney level – the top 0.1% of income and wealth – that yes, there is a huge advantage to starting a little higher up the ladder. But that’s not what we are talking about.
We are talking about the people that Obama wants to raise taxes on – the top 1% of earners. The people that make over $200k/$250k. There is zero proof (even says so in the paper that you attached a link to) that this threshold is out of reach based on your starting position in life.
Upward mobility doesn’t mean going from federal assistance to Mitt Romney levels. The paper you attached pointed this out – that someone who makes $70k a year thinks making $200k is very “well off”. It’s all about advancing your situation, which still exists in America like no other country in the world.
There may be no point continuing this discussion with you though – it seems as though you’ve decided that a certain circumstance exists in spite of statistics and countless personal stories shared with you on here. What exactly is it that you want to happen? I made $500k last year and paid about 40% of it in taxes, in spite of providing people with jobs and giving large amounts to charity. What more would you have ME do to help the person on welfare become the next Mitt Romney?
You need to improve your reading comprehension Peter. Although I quoted the statistic that only 7% of the top 1% of the wealthiest Americans as measured by net worth came from families which were in the other 99% of households, the study I attached above says that only “4% to 6%” of Americans will make incomes in the top 1% for at least a three year period during their lifetimes. That means that 94 to 96% of those making more than $365,000 were born into families whose income was also in the top 1%. The following are quotes from that study:
“Do Americans have an accurate understanding of their chances to achieve riches during a single lifetime?”
(Why is that important?) “Misinformation about the American income distribution and one’s chances for becoming rich can make it similarly difficult for Americans to take sensible positions on tax policy.” (Tax policy is exactly what we are discussing here.)
“Public opinion data suggests that a strikingly large proportion of Americans, and particularly young Americans, believe they have a reasonably good chance of becoming rich in their lifetime. Analysis of PSID data demonstrates the actual level of opportunity for upward income mobility over the life course and shows that Americans greatly overestimate their chances of being rich.”
“Only 4% to 6% of Americans can expect to be “very well off” (top 1% of income over a three year period) during a thirty year period of time.”
“… those starting in the top 25% of the distribution had between a 12% and a 17% chance of entering the “very well off” (top 1%) group at some point over this period.”
“Those under age 30 household heads and partners starting in the bottom half of the income distribution have only a 2% to 3% chance of making entering the club of the “very well off” (top 1%) within thirty years.”
“50% who had achieved “very well off” (top 1%) status had also fallen to a lower level by the end of a 15 year time span.”
“While a large proportion of any elite income groups resides in this (1%) group on a more or less permanent basis, their ranks always include another large group that crosses the threshold only on a temporary basis, later to fall back to a lower income category.”
The above is fact based upon statistics from a peer-reviewed study done at a major university and not “hypothetical” nor “idealistic” as you claim. Upward social and financial mobility is greatly overstated in the United States and those who hold such misconceptions cannot make reasonable decisions. In the last thirty five years, those who are very wealthy have influenced public opinion and legislation to favor the retention of that wealth by their heirs which undermines “meritocracy” while promoting “aristocracy”.
Man Of Reason
“7% of the top 1% came from below. The rest were born to it. Not hate at all, just fact.”
“what I quoted was for the top 1% of the wealthy, as in net worth. The 7% who are currently in the top 1% from below, are not the same 7% of years earlier as wealth ebbs and flows. Same with the other 93% who’s parents came from the top 1%. ”
Not sure how my reading comprehension is off here. These statements certainly make it sound like you have some sort of statistical evidence that 93% of the wealthy got their money from their parents. Sure, I get that you are saying that the actual people change every year, but that doesn’t change the depressing fact (if it were true) that only 7% of the wealthiest 1% come from below.
Regardless of how you feel – there is NO evidence that this is the case. In order to prove this you have to define a few things ….
1) What do you mean by “wealth” – you clarified this as net worth, not income.
2) Where is the 1% line for “wealth”?
3) How can you determine whether someone “inherited” wealth?
I am likely in the top 1% in wealth, and inherited about 5% of it last year. This came from my inlaws, who pinched pennies and NEVER gave us anything – literally had ZERO effect on our success, especially considering that I am the one that works, not my wife. As for my parents, they had very little and still have almost nothing. Anyway, this inheritance came when I was already in the top 1%.
So for example, am I part of the 7% that came from below? And you say that this group changes every year? So I may not be there in the future?
You just have no clue what you are talking about, MOR. It would be smart of you to be more inquisitive about the 1% and learn what exactly people’s lives are like. Spend as much time with us as you do with your firefighter friends and you might learn more about how the system works.
quote from Jeff
“Just because you want doesn’t mean you need. ”
You are a marxist.
quote from Karl Marx
“From each according to his ability, to each according to his need”
You want to make this the United Marxist States of America.
“We are, in Marx’s terms, ‘an ensemble of social relations’ and we live our lives at the core of the intersection of a number of unequal social relations based on hierarchically interrelated structures which, together, define the historical specificity of the capitalist modes of production and reproduction and underlay their observable manifestations.”
—Martha E. Gimenez, Marxism and Class, Gender and Race: Rethinking the Trilogy
Marxist? no, more of a Utopian Socialist myself.
Marx considered that these socio-economic conflicts have historically manifested themselves as distinct stages (one transitional) of development in Western Europe.
Primitive Communism: as in co-operative tribal societies.
Slave Society: a development of tribal progression to city-state; aristocracy is born.
Feudalism: aristocrats are the ruling class; merchants evolve into capitalists.
Capitalism: capitalists are the ruling class, who create and employ the proletariat.
Socialism: workers gain class consciousness, and via proletarian revolution depose the capitalist dictatorship of the bourgeoisie, replacing it in turn with dictatorship of the proletariat through which the socialization of the means of production can be realized.
Communism: a classless and stateless society.
Utopian socialism is a label ascribed to earlier socialists whose emphasis was on designing or imagining ideal forms of society. A utopian socialist is based on an idealist philosophy, where an ideal is envisioned and then worked towards, in contrast to Marxisms materialist methodology.
JB, successful people are penalized for all those “tax loopholes” that none of the left leaners here can ever identify, that us “Rich” people (top 10%) can take advantage of while we pay 75% of FIT. We are also penalized for being successful by not being able to take advantage of the Earned Income Credit, Child Care Credit, Tuition Credits/Deductions, all itemized deductions and even personal exemptions.
Funny on the personal exempotions, why are my kids not as valuable as the kids of a family making $50K? I support them completely, they don’t get arrested, don’t get welfare, don’t have to attend counseling?
That is because you make enough money to feed, house, and clothe yourself and your family with plenty of left over. Just because you want doesn’t mean you need. I’m sure you can deduct much more then the standard deduction. These credits are for the lower class not the middle class. The current minimum wage of 7.25hr is considered below the current poverty level in this country. You most likely have more deductions than my yearly income. You are just greedy if you think you deserve these kind of credits. You pay 75% of the FIT because you can and it won’t put you into poverty to do so. You 10%r’s take 75% of the income while the bottom 90%r’s do 90 % of the work to make less than 7% of the income. Have you ever had to make the choice of whether you eat today or buy a gallon of gas so you can look for a job?
i probably donate more than you make. Obviously tax laws favor the poor not the rich acoording to you. very few people make minimum wage and if they do there is a reason. back when i was working 4 jobs busting my ass going to school, i realized having no money sucked so did what was necessary instead of sitting at home watching oprah and spitting out kids. i think fucktard is a nice name for you since you seem to think the rich are greedy. i grew up very middle class so you can quit assuming. it really just makes an ass out of you
While I’ll avoid all the name calling here and insults…. I do love the statement that the bottom 90% do 90% of the work and make less. It all seems so unfair!!!!! 🙂 Waaaahhhh
If I was in that 90% doing all the work and making 7% of the income, I sure as hell would figure out a way how to get OUT of that situation. Not easy in a recession, but the economy changes all the time. There will continue to be opportunities for everyone….
You’re so right Peter. I’m sure that the entire 90% must have the opportunity to break into the top 10% of wage earners and with a little work and ambition, I’ll bet we could fit at least 90% into the top 10%. That would mean that only 10% would be left in the bottom 90%.
You’re a genius!
Actually what tends to happen in an economic expansion is that we don’t have as wide of a separation as we do now with the “top 10%” and “bottom 90%”. A portion of the bottom 90% rises and creates something called a “middle class”. That’s what really is at the heart of the debate in here….. that there IS such a divide between the bottom 90 and top 10.
And the entire 90% won’t get there. Capitalism does create winners and losers so there will always be some separation there. What (I think) people want is to feel like there isn’t such a large separation between the top and the majority. It would be better for the 90% for obvious reasons as many of them would move to a “middle class”, and better for the top 10% as there would be some help sharing the tax burden.
BTW, it is not “fair” that we are phased out from saving in a Roth IRA. Why the heck are there income limits on a savings tool that is limited to $5,000 a year? Very few people that are making $120K are even maxing it out, so lift the phase out and let me save as much as I want to. Why discourage savings when SS just plain sucks.
Are you jealous of the middle class?
JB — You do realize that since 2010 the tax code has provided for “backdoor Roth IRA” contributions via conversion, yes?
That doesn’t get you past $5,500 (the current annual limit), but the purpose of the cap is to prevent the Mitt Romneys of the world from using it as a vehicle to structure large amounts of completely tax-free income.
I do agree that the annual IRA contribution limit should be increased to $17,500 (or maybe $23,000) for those folks without a tax-advantaged plan from their employer, however.
Converting to a Roth isn’t the same as contributing. Those that converted got to give the government taxes 15-20 years earlier. The government is laughing all the way to the bank. I still can’t contribute to a Roth. You can’t force people to save, but why punish those of us that want to be responsible and save more money instead of spending it? We save about 35% of our income and if I could do a Roth, we would save 10k more.
What he is saying is that the Feds left in a loophole where even if you make too much money to contribute to a Roth, you could contribute to an IRA and convert it immediately without taxation. They lifted income limits for conversions but not for contributions.
Rick, did you notice that the CTJ fights against the wealthy? I am not wealthy but I know CTJ means me.
See the Our Mission paragraph. I quoted it above but seeing it in a link on their website is more credible.
http://ctj.org/about/background.php
This organization is all about class warfare. Obviously there is no distinction made about the character of the wealthy, the CTJ fights against all of them.
It is obvious the CTJ wants to take without paying their fair share of taxes.
Reducing the federal debt….you guys are failing miserably at this. Still, nobody can define what a “fair share” is when the wealthy pay more than the poor. I don’t care if my effective rate is 13% if I am paying $10 million in taxes. The rich will always have more money because they have done things to earn more money and if they have the self control and don’t spend it all, they have money to invest. Would you rather look up to Mike Tyson who has blown $100 million dollars and declared bankruptcy? I think he has paid quite a fair share of taxes.
“A fool and his money are soon parted.” That is the epitome of greed this country generates. Blowing 100 mil. Not that he didn’t work hard for it and has the right to blow it. BUT, declaring bankruptcy so he can get out of paying his bills and because of his position can and has enabled him to make it back another way. Having that kind of money and his excessively greedy lifestyle led him to ruin and back. Yea he should pay as much tax as possible.
Man-of-Reason, you are truly keeping score like a liberal. You count other taxes but these other taxes don’t include the share of corporate taxes paid by stock holders.
So let look at the ctj.org site.
I see a picture of Obama right off. Then I look at the about tab and I see this
“Citizens for Tax Justice, founded in 1979, is a 501 (c)(4) public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon our nation. CTJ’s mission is to give ordinary people a greater voice in the development of tax laws. Against the armies of special interest lobbyists for corporations and the wealthy, CTJ fights for:
Fair taxes for middle and low-income families
Requiring the wealthy to pay their fair share
Closing corporate tax loopholes
Adequately funding important government services
Reducing the federal debt
Taxation that minimizes distortion of economic markets”
Your score keeper,CTJ, is obviously biased.
Fair taxes for middle and low income? The low income don’t pay FIT!!!
The middle class pays little?
They want to adequately fund government serves by taxing the 53% that earn money more.
They want to reduce the debt by taxing the 53% that earn money more not by reducing government spending.
The more you tax the rich more the the rich will disappear.
http://dailycaller.com/2012/11/28/as-uk-millionaires-flee-country-over-tax-hikes-british-treasury-loses-billions/
As it stands now your mother-in-law and other free loading relatives don’t deserve a vote. I would rather they have a vote and earn the right by paying their fair share of taxes. How is that for a turn around of a phrase.
Man-of-Reason, if you want to count ALL the taxes then count ALL the taxes paid and that includes the stock owners share of corporate taxes.
NerdHero is right. Those that don’t pay taxes shouldn’t get a vote. When the number of free loaders gets to 50%+1 we are doomed because the free loaders will vote themselves more benefits without caring about the costs. It is that simple. I will extend NerdHero’s idea a little further. Why not get one vote for every dollar paid in taxes. That surely equalize the taxation and representation equation. Refute that.
That’s the it currently is!
Instead of dgetting into name calling. All Americans should realize there is a Laffer curve and the big decisions in D.C. should be how much Government do we need and spend on and how much can you tax before it has a negative affect. The problem as I see it is many rich have gotten richer and clearly the average person sees this so it is easy for the Left leaning pundits to use this to their advantage and on the other side Americans are seeing how the Government is getting more and more involved everyday and costing us more and more. Folks things have increasingly gotten out of hand. The current administration is using partial truths to keep us spending and the current Republicans keep on saying don’t tax the rich. I say make a compromise and stop blaming each other. Yes a progressive tax is fair if implemented fairly. But when 48% of Americans don’t even pay 1 cent in Federal Income tax is that fair. They think they do because it gets taken out every two weeks but in April the tax system has gotten so complicated they take their taxes to a company to figure it out for them and they get all their Federal Tax money back and don’t realize they ended not paying 1 cent. People have to have some money in the game. Get rid of the loopholes that have put in place by lobbyist and CPA firms. The biggest waste of productivity in America is figuring out legally how to take advantage of all the tax breaks. Redo the tax system so the average person can do their own taxes and then they will realize what they are actually paying or not paying and do them in a way that keeps the Laffer Curve in mind. Folks we are spending far to much time defending our positions and in the meantime Congress has taken us to a point where no one can actually simply know where we actually stand. The fact of the matter is it is very populist to say the rich should pay more but conversely we need to cut spending and cut spending now. Under the current administration we have spent more than ever and continue to spend more than ever. Cut the Government and get some real tax policies in place that have a true affect on our economy. We have to do this smartly instead both sides taking partial truths and extracting them out for a 30 second sound bite and an administration that is bent on continually not being truthful to the American people and in some ways making it worse by making some segments seem like they are evil for succeeding. Democrats should learn what unintended consequences are. The Democrats have done a lot of good for the average person, but increasing federal spending without safeguards is not going to work. For example more Federal aid for colleges will only increase College costs unless you put some teeth into the outrageous increases. Giving people more food stamps and assistance without anything in return does not make them more productive. Giving away free medical care and calling it the Affordable Care Act does not make it affordable it will flood our hospitals unless you make them pay a copay. There always has been and always will be rich and poor. Bottom line: cut spending and don’t get into to big a hurry to tax the rich unless you balance the spending and fix the Lobbyist calling for all these different tax breaks. Cleaning up the tax code would allow companies and SBs to know what their true taxes are and they can spend more time figuring out ways to increase productivity instead of figuring out ways to take advantage of some archiac tax law and don’t give away entitlements without something in return. Just look at how Habbitant for Humanity does it. They make people put in 1,000 hrs of sweat equity and make them pay an amount for their mortgage based on thier earnins. Point is those homes are taken care of for the most part. The Government should be very leery in giving anything away because it will cost way more than they ever thought and it will be almost impossible to decrease or cut it later I mean just look at Medicare and SSN now I mean the AARP freaks out when they talk about just slightly reducing any of it and we need to.
Sorry to burst your bubble Stan, but the Laffer Curve is laughable. It’s been debunked many times. Here an excerpt from a 2007 Time Magazine article:
“If there’s one thing that economists agree on, it’s that these claims are false. We’re not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves–and were never intended to. Harvard professor Greg Mankiw, chairman of Bush’s Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.”
I’m impressed by your sincerity and your willingness to look beyond partisan talking points to find common ground for solutions. Common facts are needed, yet the money behind the propaganda buys distortions and disinformation to feed Americans by the bucketfull. Until we can get this big money out of politics I’m afraid we will continue to speak past each other clinging to illusions created by people like those who purchased the likes of Arthur Laffer.
Read more: http://www.time.com/time/magazine/article/0,9171,1692027,00.html#ixzz2NGf2ZtLE
I have been reading lots of these posts and decided to offer my two cents.
Here’s an offer to you Man of Reason. I’ll agree to take all the corporate money out of the elections, if you agree that anyone who doesn’t pay Federal Income Tax, does not get a vote in any election of Federal Candidates? Seems fair to me. I mean, can you give me an example of a business where someone who doesn’t invest (has no skin in the game), gets a vote in decision making? Wasn’t the rally cry of the American Colonialist “Taxation without representation!” Seems like the reverse should apply now.
And please don’t tell me that the 47% pay “Payroll tax.” That’s a contribution to a retirement plan. As someone wrote on this blog, how funny that the media and liberals call the employee share of FICA to be a “tax” but the employer’s equal payment is a “contribution.”
Finally, I also find it amazing that so many people here seem to think that the Bush tax cuts were so evil and only benefitted the wealthy. Yet the President was so desperate to extend cuts for middle and lower class citizens that were enacted during the Bush administration.
Too bad people don’t take advantage of all information available to them. Too many people rely on news and radio shows and beleive what is said there.
Thank you NerdHero, I love challenges. But, let’s see, you want to trade the corrupting amoral corporate influences on democracy for the votes of those who don’t pay federal income taxes. And who are they?
My mother-in-law, after 50 plus years of labor, was sentenced to a nursing home costing $10,000 a month. She paid no FIT. Therefore, according to you, she has no vote. Likewise, my nephew, a corporal serving his second tour in Afganistan, is paid too little to pay FIT, so you don’t think he should have a voice. My youngest son is a freshman in college who makes too little waiting tables in the summer (although he paid FIT when in HS because he could work year round) to pay FIT. Although a Math and Poli-Sci double major who knows more than 99% of the rest of us about the issues, you would exclude him from voting too. Finally you don’t think my best friend, a man who after achieving in the corporate world, ran his own executive search business so well that he sent his kids to private schools (along with Amy Carter) and then to private universities, his daughter debuting in Atlanta Society, should vote. You see, because he had financial set-backs, a divorce, and then health problems, he’s now retired only on Social Security. Medicare has saved his life. Although he paid much in income taxes for many years, he pays none now.
So Nerd, are all these people simply chopped liver with no voice? These are real people with real perspectives which can ad to the discussion of what can happen to each of us and why we need to be sensitive to the plight of others. They are the 47%.
But, that doesn’t mean they are not taxpayers . Copied from Alaxkid above: “According to the Institute on Taxation and Economic Policy Tax Model, April 2012, these are what each income group pays as a percentage of their average incomes:
“Income Group Total Taxes Paid
Lowest 20%………..17.4%
Second 20%………..21.2%
Middle 20%………..25.2%
Fourth 20%………..28.3%
Next 10%………….29.5%
Next 5%…………..30.3%
Next 4%…………..30.4%
Top 1%……………29.0% (Top 10th of 1% pay even less)”
So Nerd, even subtracting out payroll taxes, the least among us pay significant taxes. You obviously have not taken advantage of all information available to you.
“My youngest son is a freshman in college… a Math and Poli-Sci double major who knows more than 99% of the rest of us about the issues…”
So this 18 year old kid, who has been in college for 7 months and who hasn’t paid any Federal Income Tax, knows more then 99% of the population about “the issues? You know, teenagers think they know everything! And frankly, our poor college kids are at the mercy of predominately liberal faculty who try to “educate” them about their liberal agendas. My daughter, a kindergarten teacher, was in school when our state (Ohio) recently had a vote on an public employee union control law. Despite specific warnings to faculty to not make this an issue in the classroom, she was constantly told to vote against the law, to have her parents vote against the law, that if the law survived the “recall” that she would not be able to get a job, etc.
I like the “pay tax = vote” concept. And I would give the right to vote to everyone in the active military, probably retirees too, who made such great personal commitments to this country, irrespective of tax payment.
But to the others. No. Sure we should help with caring for the elderly and the sick. And when they paid taxes they should have the right to vote. But once you have no skin in the game, then you get no vote. Simple and truly and logically reflective of how things should work.
I note that NerdHero asked for an example of a business where decision makers include non contributors. Don’t see any refutations yet. There won’t be.
So, in Rick’s world, those living solely on Social Security, or those with monumental medical expenses, or college students who rely on parents for support precluding them from income taxes, should have no vote. The fact that they worked hard their entire lives, raised kids to be responsible adults and paid a great deal of income tax previously, or that they are extremely knowledgable concerning the issues doesn’t matter. However, you do believe that a 19 year old high school dropout who joined the army because he could find no other job and can’t identify Afganistan on a map even though he’s stationed there, will make better decisions in the voting booth than the college freshman. Oh yeah, and the fact that they all pay state and local taxes doesn’t count. They must pay federal income tax during the year or they cannot vote!
How far up on Bullshit Mountain do you guys live anyway?
Nice insults there Man of Many Reasons, Most of Which Don’t Make Sense. I am sure your nephew who puts his life on the line daily would enjoy your commentary about him.
Ever heard the expression “You got to pay to play?” Yes, if you don’t pay FIT than you don’t vote in Federal Elections. If you pay city tax, then vote for mayor. County tax, then vote for county commissioner. Or, I can live with the concept that your vote is weighed by your tax contribution. So I paid $50k+ last year in FIT. My vote should not be the same as someone who paid nothing or even got a “refund” due to the earned income credit (when they paid no FIT).
No one has yet to give me an example of any business where the non investors get to make decisions for the company. So why shouldn’t government be the same?
Oh and by the way, you giving the right to vote to someone “extremely knowledgable” does not include your college freshman. I actually hope he is successful, earns a good living and then one day, after doing his taxes, suddenly realizes that all that “stuff that Dad was always” ranting about” was pure BS. And then you’ll have to live with your kid being one of those greedy rich people.
Only the last sentence could be considered an insult, and, like you, I thought it was a nice one.
“You’ve got to pay to play” may be a reasonable cliche in a poker casino, but it has no place in determining who votes. The Supremes would never stand for it.
I got an e-mail from MoneyNing. The quotes are from Jeff
“If you’re in the top 1% and you are only paying 500k in taxes, I think you are slime.”
The top 1% starts at about 400K. That is what this article is all about. Obviously these people can’t pay 500K. Why are they slime? Because they make money? Generate wealth where you do not!
” You should be paying 99% tax on everything over 10mil.”
Why? That would make them slaves to the government. Why don’t these people deserve to be free?
“You top 1%er’s bitch about so much taxes but you fail to pay your employees decent wages,”
Not so! Competition for good people is fierce.
“with few benefits and no hope of retirement.”
Not so again. Give an example of people being exploited. If these people are productive then they will be treated right because there is competition for good people. That is what the FREE market is all about. In our case the average employee has 3 times as much in his 401k as the average because we have employee contribution matching.
“It is no wonder that the social security and medicare are costing so much. You take all and give nothing but the minimum.”
I have taken nothing. I haven’t retired yet. I have paid the max every year for many years. You don’t know what you are talking about and again you have no proof or examples to back up your claims.
“These big corporations take away medical benefits and retirement funds, and give that money to the CEO’s as bonuses because the dividends look good because of the saving they are making.”
This is a problem. Medical cost have increased significantly and much faster than inflation and will consume all wealth. Obama care or the affordable care act has do nothing to reduce costs. It only makes others pay for it. I can buy the same drugs from Canada for as I can buy here for about 30%. Why? Ask Obama.
Meanwhile these companies that ‘take away medical benefits” have responsibilities to the stock holders to make a profit.
” What they don’t realize is that the medical problems still occur, the retirements still occur, but there is no money for the workers so they have no choice but reach out to the government to provide for them.”
There will always be people with serve and costly medical problems. Many of these problems are caused by the employees themselves. Don’t challenge me on this. I have my own example of stupidity when it comes to my own health but if you think that companies are responsible for curing all ills you are simply nuts. Companies are here to make a profit.
” The corporations of old provided full medical benefits and retirement funds to provide for the years of toil that the workers gave them.”
Many of those companies have unfunded liabilities.
“There is no company loyalty there are no reasons left for the worker to produce.”
You are very wrong. In our case we have very low turnover. We our proud of our ‘tribal knowledge” that goes way back because of our low turn over.
” You will come to realize that you may have it all but, you “didn’t” make that.”
I know that is false. There are no tax payers unless there are jobs. There are no jobs unless there are job creators.
“The people you use and throw away are the ones that made it for you. I hope you get cancer and it eats up all of your money. Then you’ll know what life is really like!!!”
What a sick mind. Have you tried starting your own company? Obviously not. You probably didn’t do your home work in high school let alone go to college.
I could have retired a long time ago. I haven’t because if you have ever owned a business you know it is like holding a tiger by the tail. You can’t let go. I don’t expect Jeff to understand any of this.
Again, this thread has gone off the rails. Too many are reviling people that make a lot of money instead of wondering how they can make a lot of money. Too many don’t understand what it takes or the sacrifices that are made to be able to generate that kind of money.
I needed to wash some bedding a Laundromat that had big machines to wash a comforter. I met the asian owner that could barely speak english. I asked if he was the owner and he nodded. I simply said good. I know or understand what he must do. I have no idea how many laundromats this asian guy owns now but I bet it is more than one. I have more respect for him than I do for Jeff.
I can tell you these three things.
1. you need to be special. In my case I am pretty good at math, physics, machines and can make things work. I can make machines more productive.
2. You need to have disposable income and be willing to invest it wisely either in stocks our your own company. I can tell you if you are good then investing in yourself is the best option.
3. Avoid mistakes. Most people are their own worst enemy. They can see it but is it true.
Considering that the top 1 percent have most of the wealth and pay much more than their share in taxes they did make that crap. It couldn’t be done without them because the rest don’t make enough. SO THERE. Those that can will.
I have pointed out that we all pay much more than our personal taxes. If you own a 401K then you are also paying your proportion of corporate taxes which is much higher than the local taxes. Since the rich have more stocks they also pay much more in corporate taxes.
I also saw this
”
Author: David
Comment:
The 1% are a bunch of greedy pricks who deserve to be reviled.”
Since you libtards haven’t rebuked David I assume you all agree with him. Shame on you. You don’t deserve my respect.
As a small company owner I provide my employees health care. Who is going to do that if I don’t, Obama? Now Obama wants me to provide for some non-productive waste’s health care. It is a waste. There is no right to health care in the Constitution. George Washington didn’t have health care. My employees 401K accounts are also much higher than the average because we do contribution matching and bonuses.
If those that know how to create wealth go on a long vacation you would find this country would become like Detroit times 1000.
Too much has been place on the taxes. Why can’t more people try to create wealth instead? Try starting your own company. Make it work with good ideas, good management and a lot of hard work along with long hours.
I don’t understand the entire new definition of “paying their fair share.” It’s now meaning that successful people have to pay half of what they earned, while losers and deadbeats get that money in handouts? To me fair is not “half the country receives benefits, another 40% pay, pay, pay and get nothing for it and the remainder pay through the nose and get nothing for it. I don’t see why it’s “fair” in any circumstance to steal money away from the person who earned it and hand it out to a person who didn’t earn it. I don’t see how having a litter of children, a terrible childhood, or anything else justifies talking from a person who worked for something and handing to someone who didn’t. There is a huge group of people who come from generations of moochers, who earn nothing, produce nothing (except children) and expect everything. I’m so tired of hearing about a “fair share!” The wealthy do not use public schools, public transport, public parks, public healthcare. A “fair share” would have them pay way less than the average person!
geegee, the wealthy don’t use public parks? People in Back Bay mansions don’t enjoy the July 4th fireworks or stroll through the public garden?
I hate to rehash the ‘you didn’t make that’ crap, but I’m pretty sure the wealthy drive on the roads, fly out of public airports using air traffic control, have their furniture delivered via public roads, etc. If they own businesses, those businesses likely use the same public facilities, and their employees might stay healthy enough to come to work due to research done by the CDC.
I actually get your point, and I’m disgusted when my neighbors, in public housing, routinely get expensive take-out food and crank up their subsidized AC in the summer, while I buy my groceries and pay my own utilities. But you take your point a bit too far. If we want roads and basic public services, someone has to pay for them. Then we can debate the level of taxes and benefits that can or should be provided.
Virtually every person in America pays some type of tax. Everyone who works pays federal payroll taxes. Everyone who buys gasoline pays federal and state gas taxes. People who shop in stores pay the sales taxes that most state and local governments impose. State and local property taxes affect everyone who owns or rents a home. (Even renters pay property taxes because landlords pass some of the tax on to them in the form of higher rents). Most states also have income taxes, most of which are not particularly progressive. And many Republican governors in states with Republican legislators are now trying to eliminate progressive income taxes altogether and substituting regressive sales taxes.
According to the Institute on Taxation and Economic Policy Tax Model, April 2012, these are what each income group pays as a percentage of their average incomes:
Income Group Total Taxes Paid
Lowest 20%………..17.4%
Second 20%………..21.2%
Middle 20%………..25.2%
Fourth 20%………..28.3%
Next 10%………….29.5%
Next 5%…………..30.3%
Next 4%…………..30.4%
Top 1%……………29.0% (Top 10th of 1% pay even less)
We need the federal personal income tax to be progressive to offset the regressive impacts of these other taxes. As these figures illustrate, America’s tax system as a whole is now just barely progressive.
For complete graphs and charts, click here:
http://www.ctj.org/pdf/taxday2012.pdf
Why don’t you ask what married couples earn $450k per year. That’s when you start getting into doctors, lawyers, engineers, accountants, pharmacists, etc.
What does it actually affect a random person is X% of the rich ‘control’ Y% of the wealth? Bill Gates doesn’t effect my life one bit. Neither does Warren Buffet. Or any of the other 1%.
Since Texas has no state income tax, we don’t have to worry about that. Sales tax is not incurred on food, so that part goes out the door. The richer people pay more sales taxes than the poor since they are more likely to spend more of their disposable income. The poor usually rent so they don’t directly pay property taxes. The rich have bigger homes so they pay more property taxes. They probably drive more and pay more gas taxes. What did I leave out? The poor will NEVER pay more taxes than the rich. It might be a higher percentage of their disposable income, but that is not the same.
While the article is interesting, it ignores a whole group of people impacted by the tax law changes – dual income families who each make $225,000 – in many urban areas, that isn’t just the “public figure” types focused on here. Why do we penalize families with two incomes – why do we allow the “marriage penalty” to continue to exist?!
I agree, but don’t know the answer to that. You’d think that the marginal rate would kick in at twice the family income as the single person’s. Anyone here know the rationale?
Let’s just go crazy and say that CEOs bring the ratio of pay down to 100 to 1 from the lowest paid to the highest paid employee. You are still going to be paid what your education and skill sets are. Just because the CEO is paid less doesn’t mean the janitor should be paid more. Why do you think the ‘boss’ is always paid more than the people they manage? it is the hierarchy of management and education. Now, if you don’t like that system, go start your own business and when YOU hire employees, pay them more than YOU since they deserve more money, thus they will pay more taxes than you will. A flat tax will always be regressive because the percentage of disposable income that is left over is less for a poor person than a rich person. Let’s just say a person could live on $20,000 and have all food and shelter taken care of, if a person makes $100,000, they have more money left over to spend. And you say, well DUH, but that doesn’t mean the gov’t needs to take more of that money in taxes. We can all CHOOSE to spend less money and have smaller house, but the human ego won’t allow it. The CEO cannot possibly live in the same neighborhood as the janitor. This social class warfare has been going on since the dawn of time and nothing will ever change it. Everyone should pay a percentage according to what they give and take from the gov’t. The poor use more services than the rich and the rich subsidize it. They shouldn’t pay more to subsidize the poor.
Gee. All this arguing is wasting time that should be spent on firing our inept Congress, exposing and jailing our greedy Wall Street Bankers and ending the Federal Reserve (I challenge you to find out who’s on it). There is a reason you guys all argue. It is a distraction from the real issue: that our nation’s system is broken and we will only survive if we re-invent our future not based on money and celebrities, rather, on seeing that everyone is fed, has shelter and shares resources. Doesn’t anyone see the charts of who owns everything? Keep licking your wounds of how many taxes you pay but in the end, you will be in a coffin just like everyone else.
Click here LC to put it all in perspective > http://news.yahoo.com/wait–wealth-inequality-the-new-harlem-shake—214735978.html
The poor person shouldn’t be spending 20% of their money on lunch. They should be bringing their lunch. Making red beans and rice at home having oatmeal or a peanut butter jelly sandwich that costs .50 cents. Then it will only be 5% of their income or less. You can eat lunch for less than .75 cents if you really, really have to. Making a pot of soup will be cost effective. Baking your own bread is cheap. Heck, I can make 20 pancakes for breakfast that probably costs less than $1. The poor can CHOOSE to eat a cheap as possible, many just don’t WANT to.
So if a Union worker is paid $75 an hour to build something and a company can train the same person in china for $10 an hour and the cost of shipping those items let’s say adds $20 an hour, the cost is still cheaper. Why would a company pay more than they have to? As for gov’t money for training, there is billions of dollars out there for people to learn new skills.
“Everyone needs to contribute, everyone. No one should not pay taxes even if you make 10,000 year, pay 10$ in taxes.”
I agree. It is necessary so that the low income people feel some of the pain of their poor decisions. Everyone needs to have something at stake.
Peter – Income tax is not the only tax. The bottom 20% pay 12.2% in state and local taxes while the top 1% pay 7.8%. Low income people do feel the pain to a much greater extent than the 1%. They do have something at stake and they are “taxpayers” also.
The only tax that is “regressive” in your book is a sales tax, because it is a flat rate upon taxable purchases. Federal Income Taxes as well as most state income taxes are progressive, meaning the rate escalates as taxable income increases.
Frankly, even the sales tax is progresive since people with more available income will purchase more goods and services subject to sales tax.
But bottom line is that the Federal Income tax is BY FAR the biggest generator of tax revenue in this country. Other than the estate tax, which “poor folks” don’t have to pay, the please tell me another tax with a rate of 39.6% or more.
By the way, I found amusing a recent left leaning article talking about the “payroll tax.” It complained about the 7.45% paid by lower income folks. Well, that’s for Social Security and you are supposed to get that back. In the same article it did finally have to mention that those lower income folks’ employers also paid the same amount for each and every employee. Interesting though…they didn’t call it a payroll tax in that instance, rather it was the employers’ “contribution.” Funny, the “payroll tax” after being paid, gets paid back….while the “contribution” isn’t paid back to the employer.
Have to see the irony in that huh????
No Rick, Alaxkid didn’t say that sales taxes were the ONLY regressive taxes. However, sales taxes are regressive because lower income Americans spend a greater percentage of income on taxable goods than the wealthy. All other taxes except “progressive” state and federal income taxes follow the same regressive model. Many wealthy Americans pay a less percentage in tax than middle class Americans. You, somehow, believe that’s fair.
Please explain why.
JB, it is hard to bring down the tax rates following the law. Romney got his personal tax rate down to 13% because he relied only on dividends.
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that is what itemizing your deductions does is lower your marginal rate to your effective rate.
Even if Romney made $400,000 a year, his rate would not have been much higher since he donates a large part of his income. He could effectively donate $400,000 a year and live off dividends. Is that wrong? No, but I am pretty sure he is phased out of giving away all of his money on his tax return. We are phased out of getting 100% of our charitable contributions so let’s stop with the rich being able to give away all their money and get a deduction for it. Many give away large chunks as estate planning so the gov’t can’t get the money, but you can’t exactly get a $20,000,000 tax deduction for giving the money to open a hospital. BTW, how many poor people have hospitals named after them? I would rather the rich give money to build hospitals and libraries than for the money to go to the gov’t to be wasted on pork projects and go down the drain in fraud and other waste. The less money the gov’t has to work with, the less waste and fraud there will be.
For all of you out there that are not intelligent, hard working or persistent enough to make 400K per year or that think everything should be dropped in your lap, I live for the day when you tax this group to the point of imploding the economy.
You can’t keep going after payroll taxes, period. Raise cap gains. Everyone needs to contribute, everyone. No one should not pay taxes even if you make 10,000 year, pay 10$ in taxes.
By the way, I married a kiwi and happily moved all of my hard earned $$$ out of the US before the last election.
Good luck.
You are wrong Jesse. For fifty years prior to 1981, the top tax rates ranged from 70% to 94% and, contrary to your predictions, nothing imploded at all. Rather, the United States had it’s most productive and fastest growing economic decades. The middle class was strengthened and provided the consumer engine to raise everyone’s living standards, including those most wealthy.
I do agree with your second sentence and am glad you moved to New Zealand with its single payer medical system.
I love all the referenced to tax rates 30 years ago, when Chinese commerce was synonymous with “cheap goods,” India was considered one of the poorsest and most backward countries in the world, there were no emerging economies in Asia, South America and EU AND there was no internet.
As usual, posters like you just can’t accept the fact that 25% pay in 85% of Federal Income Taxes. They were paying a disproportionate amount, well beyond their “FAIR SHARE” before the great and all knowin Obama arrived. Now they are being asked to pay even more (and others to pay even less or nothing at all) while being vilified at every opportunity. By the way, what level of adjust gross income do you have to earn to be in the t0p 25%? Why ownly $69,000. In the Top 10%? Only $116,000. So a husband and wife, teacher and nurse, are members of that EVIL RICH CLASS, that won’t pay more for more welfare and free college and so that other taxpayers can actually get “refunds” of FIT in amounts greater than what they paid in?
By the way, all those Evil Bush tax cuts…..why was Obama fighting so hard to keep them for eveyrone making under $250K? Remember all the scare tactics about the “average American family paying $4000+ in FIT if the rax cuts were not preserved? GUess those Evil Bush Tax Cuts benefitted more than the Evil Rich Class…..
So, you believe that the economic rise of emerging markets, like China and India, somehow necessitate lower taxes on the wealthy? I haven’t heard that argument before. Perhaps you can elaborate.
I can accept the fact that 25% pay in 85% of Federal Income Taxes if you say so. However just the top 20% have 95% of the financial wealth distribution in the U.S. The top 10% have 85%. The top 1% has 42% alone. The bottom 40% shockingly holds only 0.3% of wealth. Perhaps that’s one reason people believe that the top 1% should pay more.
Read more here> http://www2.ucsc.edu/whorulesamerica/power/wealth.html
We saw during the “Fiscal Cliff” negotiations that everyone realized that increasing taxes on those making less that $250,000, the consumers, would cripple the economic recovery and increase unemployment. Otherwise, I’m sure that the administration would have supported letting all Bush tax cuts expire.
For a great perspective on the increasing financial inequities in America, watch the video here (after the 30 sec commercial) >
http://news.yahoo.com/wait–wealth-inequality-the-new-harlem-shake—214735978.html
I’m not sure I would go back before 1941 as the highest average % of Americans paying any Federal taxes was about 8% before WWII. But that changed, employer reporting methods, and the Federal Reserve Primary Dealers have fought to see every dime possible to be collected, is collected.
Also, being the U.S. was the largest, not destroyed in infrastructure, had everything to do with the bubble of consumerism. That consumerism, or money acceleration, made possible the wealth, the wealth enabled government expansion.
Can’t expand without that money revolving in the economy. But those days of rapid expansion are now in foreign markets, both in labor and products.
All told, the government does not create wealth, it decides who wins and loses., and that is a very hard thing to do effectively or fairly. Hence the two party ideal with the participants only in it for the money.
I got an email from some on that said I didn’t create the bridges and the roads. While it is true I didn’t create all bridges and roads and I didn’t even create the roads around my business, the developer did, I paid for those roads when I bought the land from the developer. As far the as the other roads, THE GOVERNMENT DIDN’T CREATE THOSE ROAD EITHER. The government doesn’t create wealth to build roads and bridges. The ‘government’ is only an agent for We the People and specifically those of us that create wealth.
Where do the tax payers come from? BUSINESS!!!!!
JB, it is hard to bring down the tax rates following the law. Romney got his personal tax rate down to 13% because he relied only on dividends. However, what isn’t stated is that his share of the profits in the companies that he owns part of are taxes at the highest or second highest rates in the world. See my example about taxes on dividends above. That is very close to a true life example.
Historyspeaks, $1,000,000 at the beginning of the century is a LOT more than than $1,000,000 now and they could hide it then whereas you can’t now because of the violation of the 4th amendment that occurs every tax season. I want you to dig up information on how many people actually paid 90% taxes on their income.
Vince, I am not sure those executives deserve that much. I really do believe that executives should have a huge stock holding in the companies they are advising so they will act as owners.
There are a lot of executives, who are not the CEO and do not work in investment banking, that make over $400,000 a year. Just look at a public company’s Proxy statement for named Section 16 officers like the CFO, CMO, etc.
History, that is why Reagan simplified the tax code. You can have a 90% tax bracket, but with all the ways to get deductions, the wealthy were able to bring down their effective tax rate.
Jack, I agree with almost all you say, until your last sentence. Manipulating the tax code is exactly what’s happened since Reagan to reduce taxes on the wealthy, increase the national debt, and decrease pay and benefits for the middle class. Is that what you meant?
You are right that the wealthy brought down their effective tax rates under Reagan’s “simplification” of the tax code. The CEO making the equivilant of ten million per year saw his take home pay jump by 136% by the end of Reagan’s two terms according to another post here. The guy making $50k saw a 2% decrease.
What went almost unnoticed was that Reagan increased the national debt 56% his first term and 43% his second (adjusting for inflation). Bush’s I and II continued tax cuts, deregulation, and tremendous deficit spending without regard for balancing the budget (except lip service). I think that understanding how we got here is very important to finding a solution to getting out of this hole, yet no one on the right will look at it, and we all keep talking past each other.
The simplification was good but the tax cuts created tremendous economic inequity and national debt.
Regarding all those Evil Bush Tax Cuts…..why was Obama fighting so hard to keep them for everyone making under $250K? Remember all the scare tactics speeches and press releases about the “average American family paying $4000+ in FIT if the rax cuts were not preserved?” Guess those Evil Bush Tax Cuts benefitted more than the Evil Rich Class…..
You should know the answer to that since you’ve asked the question before and it’s been answered by others. O.K. in good faith, I’ll try again.
Every possible tax or spending raise or cut is analyzed by the OMB and a percentage benefit or return is placed on it. One type of spending increase during this recession and recovery may return $1.50 for every dollar spent, while another may return only 50 cents. Tax cuts and increases are valued the same way. Therefore, acts taken by congress and the administration need to reflect that and increasing taxes on those who have incomes above $250K decreases the deficit the greatest while having the least negative effect on the economy. Taxing those below that level negatively impacts the economy to a much greater extent since that would take money away from consumers who drive the economy by spending.
Look it up yourself.
In the early part of the 20th century, personal income tax rates were as high as 90% on incomes over $1 million. Corporate taxes were also high and our national debt was minimal.
From 1920 through 1980 with this system of taxation, somehow people still became millionaires and billionaires and thousands of successful businesses were created and a thriving workforce was buying cars and homes and other things.
Now, miraculously, after 40 years of cutting income tax rates for those at the top and corporations, America is now trillions in debt and our workforce is suffering from record unemployment, despite the supposed “official” rate advertised by the government.
If the argument that cutting taxes for the rich will create jobs doesn’t ring hollow now when will it? Based on the rates those at the top now pay compared to the 1920’s our country should be like a Utopia with jobs for anyone who wants them at wages that allow you to afford a home, a car and good healthcare.
Keep drinking that republican kool aid.
What is defined as “hard work”? A CEO wasn’t a slacker in order to become CEO. We see many examples of a CEO turning around a company like Ford and one that fails like Mark Hurd. Their salaries aren’t excessive, it is the stock that creates the increase in wealth. Those stock option don’t cost the average employee any money. You are paid what you are worth. Maybe some companies should give all employees stock when the CEO gets stock. Many put stock into the 401k match. If this is the case, you want your stock price to rise. CEOs ‘manage’ thousands and thousands of employees. For those on this board, I want to know how many people you manage. My wife has 75 people under her and that is making her miserable. Imagine having 75 VPs under you all having 1,000 employees. CEOs and CFO are now responsible for making sure their books are correct or THEY go to jail. Not you, not your boss. Do you want that responsibility?
1. Yes. Executives and share holders benefit. I am a share holder. I am going to buy stocks in those companies that provide the best return on investment. BTW, you are probably a stock holder too if you are part of any pension plan.
2. Good point. I think that those that take over should have to buy a lot of the company stock, say 30% of their net worth. This way they WILL act as owners.
3. Because, average and common is cheaper over seas. The rich get richer because they know how to become rich. Once gets a little disposable income you can invest it. If done wisely you get more disposable income and so on. It cascades and builds exponentially. The first step is to get some disposable income and invest it instead of spending it on a hot car, truck, boat or big screen TV or gamble it away.
I don’t think executives should be paid as much as they are. I don’t see how many companies can justify the high salaries based on ROI. A lot of the increased productivity has come from better machines, not workers. These machines can be located anywhere.
4. There were a lot of tax loop holes back then. Many have been closed. It is also harder to cheat. Just 40%?!!!! Add all the other taxes and were aren’t any better off than serfs who had to pay 50%.
Interesting discussions. I have a few questions.
1. Is the primary reason businesses moved their operations to low-cost countries to increase their profit? If so, who benefits the most from the increased profit? The executives with their bonuses and stock options? The biggest shareholders which include the executives themselves?
2. I am all for founders of businesses keeping more of their income from their businesses they have worked hard to build. What about those who take over the businesses after the founders retire or are forced out by the boards of directors? They didn’t build the businesses from the start but they feel entitled to huge salaries, options, bonuses, and other negotiated benefits such as golden parachute and uses of corporate jets for private uses. They may make the business more profitable or they may make it less profitable; why should they care as long as they get their golden parachute and retirement benefits?
3. How do you explain the widening income and wealth gaps in the US and many other countries? Why are the rich getting richer while the income of the average workers stagnating for the last 30 years? Why is it considered class warfare to question this disparity? Why aren’t the wages increasing at the same rate as the pay of the executives?
4. In the period 1950-1970, the top marginal tax rates were 70%-90%. I don’t recall that period having high unemployment rates and the wealthy fleeing from the US. I do recall that we had a prosperous time with a growing middle class and one-earner families. So if the top earners had no problem paying those “confiscatory” rates, why do they have a problem with just 40%?
5. The ratio of executive pay to worker pay before 1980 was roughly 25 to 1. Now it has grown to 200-500 to 1. Why? What are the justifications? I don’t think that today’s executives are working harder and smarter than the executives of the past.
Great questions GaryR.
The minimum salary for a major league ballplayer is about $400G, and we know there’s a maximum of about $30 million out there for a couple of guys anyway
Many would figure it out once the majority of the free money is gone. Don’t they have to make some sacrifices? I mean since most post extreme examples, they can buy less food and get rid of the big SuVs they drive. Getting enough money from the govt to live on doesnt give you incentive to better yourself. why do yoi think most feel the need to finish HS and go to college. College isn’t for everyone. you can be a plumber or mechanic and not go to college.
People that work on your car don’t make minimum wage. A mechanic is skilled labor.
This is getting ridiculous. I have been quiet for a several of weeks, but have to respond to all this envy and jealousy (and that is what it is though it may be disguised in high sounding rhetoric).
I was in Czechoslovakia before the iron curtain came down and here is how their system worked: Basically one large GS salary system that established wage scales for all jobs in the country established by the government. Professionals at the bottom, at the top Communist Party leaders. Waiters, taxi drivers, barbers, etc were higher up in the salary ranking than doctors, lawyers, and engineers. The government was paranoid about intelligent people. The result was that there was no economy to speak of. Couldn’t even find a decent restaurant in Prague. People waited in a queue for 7 years to buy a Polish version of the Russian Lada and then it took about 7 years salary to buy it! People all over Prague on street corners and in doorways (including taxi drivers and bellhops) soliciting a conversion rate of 25 crowns to the dollar (official rate was 9) in order to get hard currency to go to the one outlet (established for government officials) where they could buy western goods – but it only took hard western currency. There was a saying at the time (I believe initially Russian) that went – “They pretend to pay us, and we pretend to work”.
And we know how all that worked out behind the iron curtain, don’t we!
The reason Sports stars, Movie stars, etc make what they make is because the market establishes the values, not some central authority that thinks it knows better. If you don’t like it gather up a few hundred thousand of your friends and do an occupy Hollywood and boycott the movies and sporting events!
Everybody has the opportunity to better themselves in this country (some obviously have a better opportunity than others), almost nobody except party hacks had that opportunity behind the Iron Curtain. How far you get in this free market is, generally up to you, and you alone. And don’t bother me with anecdotal evidence of how you cousin got screwed – “stuff” happens!
I have no problem with having the uber rich pay their fair share. But the uber rich don’t start at $400,000 as many have pointed out in these posts – over, and over, ad nauseum. For example, Wall street twenty somethings making $10 Mill per year and producing nothing of any value and their ilk (think Charlie Sheen in “Wall Street”) need to be brought down to earth.
But those envious of people who have lifted themselves up by their own intelligence and effort just don’t get it. These hard working Americans are not the enemy, and they do pay their “fare share” – and they are the middle class and what has made this country great and prosperous.
The middle class has changed dramatically in the last 60 years. In the 1950s and 1960s, a man could work at a blue color job and while his wife stayed home ad raised the family. In the 1970s and 1980s, both now had to work to maintain that. In the 1990s they both had to work and they also burned up savings. And in the last decade, they both had to work, had zero savings, and had to borrow. All this just to be middle class. And please don’t argue with my dates. This is the result of decades of mismanagement by our business unfriendly government that spends beyond its means and is driving the dollar down and down. In the 1960s we would be talking $50,000 per year, today we talk $400,000. This is the new upper limit of the middle class, not the rich.
Be careful what you wish for ladies and gentleman! Do you really want the government deciding what people should make? And make no mistake, manipulating the tax code is just the start of accomplishes just that.
Jack, I agree with almost all you say, until your last sentence. Manipulating the tax code is exactly what’s happened since Reagan to reduce taxes on the wealthy, increase the national debt, and decrease pay and benefits for the middle class. Is that what you meant?
I should have said, “this type of manipulation” – designed to soak the successful, just because they are successful is a first step to prioritizing who should be rewarded and who shouldn’t. The Iron curtain countries at least were not hypocritical about it. They just established the incomes as they saw fit by job category and thus pushed the professionals down the pecking order. The super stars had no incentive to produce and their economies failed.
There was a day when people consumed only and all of what they produced.
Then they started trading some of what they produced to others for what they produced.
Then they started specializing what they produced based on individual capabilities.
This is what capitalism is all about – the free flow of specialty goods and services for your specialty goods and services. In my case, I provided computer system development skills. The free market assigns the value to the specialties one produces, and money is the medium that normalizes all this. Distort this valuation process by government intervention and you compromise the allocation of resources and capabilities. Allowing the government to fuel populist sentiment by envying those whose contributions are more highly valued is akin to throwing the baby out with the bathwater. Like I said – be careful what you wish for.
Manipulation of the tax code to motivate important strategic national priorities is what tax code “manipulation” used to be all about. Now it is used in order to gain political power by fueling populist support and rhetoric such has been on display in these posts all these many weeks.
Jack, your posts are extremely well written. Sadly, the class warfare mentality that has spawned all the jealousy and envy that we read here daily, clouds the ability of all these people to understand the truth or even seek the truth about taxes. They blindly accept that “Rich People don’t pay their fair share” when the top 10% of earners pay in over 70% of FIT while have 45% of the income.
Its also why for the past 6 years or so, we heard that the Bush tax cuts only favored the wealthy, but once Obama was reelected, he and his croonies worked so desparately hard to retain those Bush Tax Cuts for earners under $250k and then ultimately $450k.
It is so sad that in this age where information is so easy to get, where you can educate yourself with real facts and figure and determine who really is telling the truth and who isn’t, that so many people (ie voters) choose to be lazy and simply accept what they are told, and usually told in a way to stir their passions and outrage (“RICH PEOPLE DON’T PAY THEIR FAIR SHARE!, so let’s get em!!!!”)
Rick:
Thank you for the kind words. I have been reading these emails for weeks and I am amazed not by how many “don’t get it (that is, there is no such thing as a free lunch) – that is to be expected; but, how well written most posts are. Very interesting stuff, by intelligent people. It is very easy to see how such crafted rhetoric can fuel the populism we see in this country today.
Unfortunately, our economic system is about to hit an iceberg (and will fairly soon) while the politicians are shuffling the deck chairs of populism with rhetorical platitudes about the rich. This is not about how much the “rich” or more properly the upper middle class make; but about an economy trying to operate with a business unfriendly government bent on maximizing out the credit card provided by the Federal Reserve. They do not understand that the tourniquets being applied to the bleeding may make the patient feel better in the short run; but, in the long run the limb and possibly the entire economic body could die unless proper painful treatment is applied – and soon.
If raising the marginal tax rate on incomes over $450,000 to the previous level is called “soaking the successful just because they are successful”, then what do you call the successive tax cuts for those same people over the last thirty five years which created the tremendous debt crisis America now faces? (the “fleecing of America” perhaps?) In historical context and certainly compared to other industrialized nations, a 39.6% marginal tax rate is very low especially considering the tax avoidance schemes available and employed by those with enough money. Even our average effective corporate tax rate is lower than all countries but Turkey and Mexico regardless of the marginal rate.
The tax code has been changed, “tweaked”, or “manipulated” if you will, every year since independence and guess what? Our capitalistic system has never been in any danger and still is the standard all countries (including China) turn to for guidance. I suppose the term “enhanced” is used if changes favor you, but “manipulated” if they don’t. Regardless, the bottom line is that the rhetoric far exceeds the pain imposed on those affected. Your previous tax cuts were financed by borrowing money. It’s time to pay it back.
If everyone was taxed in proportion to their income, the rich will pay much more and so be it. What if everyone paid 20 days worth of wages annually as taxes? That’s a fairer system and accounts for time worked not just what value society chooses to arbitrarily place on the work and contribution of each person’s sweat and work. Greed is turning the US into a glorified 3rd world nation where the poor are getting relegated into generational poverty that is difficult if not impossible to escape from. As the gap between the rich and poor continues to grow the essence of humanity and democracy becomes eroded. BTW do not bullshit yourselves that entertainers, head football coaches or CEOs that make millions per year really contribute more to the economy or society than firefighters, teachers or doctors.
yauyau
Well said.
Many rich, and well educated, felt that they are being penalized for getting an education, working hard and making a great income. But most do have any compassion. Many feel that it is not fair for 47% of the population to not pay taxes.
This has been a great discussion, but no one has given a break down that shows what groups of people by percentage make up the 47% who do not pay taxes. Some of the groups are: Senior citizens who need housing and/or medicine, handicapped (mentally and physically), hardworking people who make minimum wage (without them, the rich could not get their houses or cars repairs, their grass cut or go to their favorite restaurant, shopping center or variety store, etc.) and many other groups. It would be great if this discussion include what would happen if these people are required to pay taxes and what would happen with they did not get help from the government.
The article fails to mention the biggest and most important group making over $400K – small business people. This is the group that creates jobs and grows the economy.
People over time do what benefits them the most. Over short periods of time, or among certain people that are really attached to their values, one can get people to do the “moral” thing. For most, they eventually figure out what the rules are, and how to play the game, and try to use the rules to their advantage.
1. Whatever you subsidize, you get more of
2. Whatever you tax, you get less of.
3. People do what they can to keep the things they value about them. they vote with their feet.
4. the more heavily regulation and taxation is, the more aberrant the behavior, the less transparent the economy, the less fair.
5. The poor will always be with us.
6. The government will never have enough money
My wife and I have relatives that live in confiscatory tax countries. Free healthcare, free public education through college, retirement etc., cradle to grave. At one point, Norway, for example, actually passed a tax that took more than 1 dollar of tax for every 1 dollar earned at some income levels. So, what happens in that country.
The corporations try to report no income. Their employees have no money after taxes. So companies provide benefits, like housing, transportation, etc. Who gets what house/apt isn’t entirely fair. Who gets what car isn’t always fair. The auto market is affected, the real estate market is affected. In every facet of life, it’s who knows the rules, who knows the people, and normal market forces are skewed. A distant cousin has 4 master’s degrees, all free tuition. He speaks 4 languages fluently, and gets by on a couple of others. Does he use any of those degrees? No. He works in a nursing home for a portion of the year, until the income gets to a certain point, where the taxes would take too much of it to suit him. Then he spends the rest of the time traveling on freighters around the world, staying with relatives and others. He enjoys his life, but he’s got no spouse or children, and he’s not very productive in a “goods or services” type of way. And the government of the country he calls home, hasn’t gotten much out of him.
I know some doctors who sold their practices to the hospital system, and started taking a salary. The burden of regulation was just too great, as a small businessman. They had let the nurses go that were working with them, and hired people to do billing and legal compliance with HIPAA, etc. They hired people part time, so they wouldn’t have to pay insurance, paradoxically. But they couldn’t do it any more. After the sale, they worked fewer hours, saw fewer patients, were less available to the ones they did see. It’s not their practice any more. They said to me that the couldn’t make the money working on their own, so they went for lifestyle.
People were surprised when Phil Mickelson came out and said that he was thinking of moving to a low tax state. I’m surprised that he hasn’t already.
Laws, tax and otherwise, should be written with some thought to how that law will shape the behavior of those people living under those laws. Raising taxes on the rich changes their behaviors over time. Some will move, some will change their lifestyle, some will adopt exotic tax schemes. Some will choose to take it in the shorts, full of altruistic values. What will happen to those poor people that supposedly only liberals care about if Obama et all passes laws eliminating the tax deduction for charities?
Hmmmmmm, I agree with most of point one. The problem is supply and demand and not true value to society. I don’t see where lawyers create wealth whereas a production line worker does for the company and its owners/share holders. A waiter doesn’t create wealth. I am an old phart. I have worked in hotel kitchens, soldered and welded parts for oscilloscopes, spent time in the navy and now I own a small business. I have seen it all from all points of view.
I agree with the second point about the write offs and deductions. I know my company takes advantage of the partial write offs for business meeting with customers but we write on the receipt who we were with so we won’t get into trouble with an audit. We also take advantage of depreciation and the expensing but we rarely can take advantage of the whole limit.
I have a comment on your hiring paragraph. First, companies are not hiring because they don’t know what those employees are going to cost them. Obama and the congress have not been business friendly. Also, why hire employees if there isn’t enough demand. It is the chicken and the egg effect or the vicious cycle as you say. Second, employers don’t hire employees just so the government can get more tax revenue. Third, there are plenty of jobs out there that aren’t filled. The problem is that only one in a thousand or less is qualified to fill these jobs. Fourth, companies can hire average skills from just about any where on the globe and average is cheaper over seas. If you want a top 1% salary you need a top 1% skill and even if you have that top 1% skill you probably find ways to reduce the taxable salary so you aren’t in the top 1% tax wise.
Get this. Most small companies do not think of the government as their friend. Many are just trying survive in spite of all the government regulations, burdens and taxes. These companies will hire people when they think it is in THEIR best interest to do so. The government’s best interest is not a consideration. If the government wants us to hire more QUALIFIED people it will make it profitable for us to do so. I just don’t see this happening with the current government that hates business. Like I said above, I own a small business.
If these companies have all these jobs available then why aren’t they training workers to do the job instead of shipping it off to another country. How does one get qualified to do a job when he/she cannot get hired? There is no money to self educate, so workers must indenture themselves to the government to get an education. Then when there are no jobs because while you were becoming indentured to the government, all the jobs left the country, and then, better yet, the corporations changed the rules and now you have to pay them directly for “Certification” before they’ll hire you. So now they have it that you have to pay the company to get a job.
Well Peter, it just makes sense that administrations that are small business friendly would see more jobs created during their terms, and those who are unfriendly would see many less. Small businesses are the job creators after all. So I suggest you look up job creation during presidential terms to see which administrations really are business friendly rather than regurgitating partisan talking points of the propaganda machine. No doubt you’ll be surprised.
Business’ do not compete against the government for profits or survival. They compete against one another. The Government’s job is to keep the playing field level and competition fair. But, as I’m sure you are aware, some businesses are more equal than others when it comes to political influence, and therefore, better able to crush their competition through quid quo pro with campaign donations. In those cases, politics can skew capitalism. Ask yourself which party receives more support from big business and therefore, might be more prone to repress small business. (hint: it’s also reflected in those job creation numbers)
Finally, government is neither the enemy, nor is it unproductive. It is simply you and me getting together to help each other succeed in various endeavors where we cannot separately. And, like private industry, it contributes greatly to our economy. It teaches our kids, supports our parents in old age, provides insurance to help us survive bad times until we can get back on our feet, etc., etc. We are communicating now because government scientists saw a need for this Internet and forsighted legislators including Al Gore, created and passed legislation to make it happen. (He never claimed to have “created the internt” by the way.) Like any business, it creates many jobs, but its main purpose is to create opportunity, something we lose when we constantly assault our government and neutralize its effectiveness.
The government that is best for your small business is the one most able to keep you on a level playing field with your competition, not the one that favors you over your competition because of your campaign contributions. Remember, tomorrow, someone else may contribute more.
I am going to start with this first. From what I see here is that most people think that because society thinks that certain jobs are worth more than others there should be “lots” of perks. Well, that guy serving you in the restaurant may just be working 50 hours a week on his feet all day, catering to good and bad customers (like you), but it truly doesn’t matter if a customer is pompous or rude, does it? This person still has to be polite and make sure they are taken care of. And then we have production workers, that I would say most white collar job people couldn’t even handle. Yet we live in society that says certain jobs should be paid more than others. That some don’t work as hard as the next guy. I’d love to see one of you become a window washer for those buildings that are more than 20 stories high, and this one tops the cake, a person on the front line defending our country making less than the average income.
My point: I see something wrong with the value we put on ones job.
Second point, I don’t care who you are, if you can’t have a meeting at a restaurant without spending less than $50.00 for two people then you had better get out of business. I had more “coffee” with people than lunch as a manager because I was a “good” manager. I also found good restaurants that didn’t charge an arm and a leg. I “never” once, in a major metropolitan area (downtown) spent more than $35.00 for two people. I also went “to” my customer’s place of business for meetings instead of lunch because, lets face it, they just love showing off what they do and make. They are proud. – No one needs the budgets they particularly spend in congress, and certainly not in every day life. I don’t care who you are and I don’t want it done on “my dime”, yes taxpayer money. – I also don’t want to pay for you to ride first class. I work hard too and I would prefer first class, but too bad. In addition, there is no need for the government to allow write- offs on personal planes. If you want to fly your own jet, then pay for your own jet, you have that right, but I don’t want to pay for it. – Let’s get to small business owners, you can say what you want, but most do “color outside” with those write- offs, even daycare workers. I have known several that eat the daycare food for breakfast, lunch and dinner and even evening snacks. I have seen some re- carpet their homes throughout and they don’t even use those parts of their home for the daycare. They even use it to buy Christmas presents. I have seen them do it with cars and all kinds of things. Yes, I have seen them become “upper class” just because they run a daycare in their home due to all of the cheating. Don’t tell me this does not go on.- I have even seen many small business owners write off all of their golf outings. Seriously, I could care a less whether you or your customer like to golf, have your meeting at a coffee shop or your place of business. Golfing is not working, period.
If the “loopholes” were closed I am sure we “couldn’t” fix the deficit, but I am betting it would put a good dent in it.
And while we are at it, lets fix the bill that give companies a tax break to send jobs over- seas.
It takes money to make money and if companies don’t start hiring our country is in big trouble because if people aren’t working they cannot purchase and Wall Street with suffer. There was an article just the other day saying that Walmart is losing business because their customers can’t afford their products, now I don’t know about you, but if you can’t afford to shop there, where can you shop? They are cheaper than many used clothing stores. – By the way, if people work it is also tax revenue the government isn’t getting when they are not. It’s a vicious cycle and if companies don’t start putting out and thinking like this we are in BIG trouble.
MOR,
You proposed a false dilemma. The only other option to taxing those who “can afford it” is NOT just to tax those who cannot afford it The other notable missing alternative is to cut government spending, eliminating the need to raise such taxes in the first place. It’s not very reasonable of you to omit that unless your intent is to mislead. You could try and argue that we have to pay today, and worry about cutting spending later, but I think any reasonable individual can see the constant tax the rich for benefits that everyone else demand, is just an abuse of government/majority power. It enables a culture that is destructive, instead of a culture that takes full advantage of the insane amounts of economic freedom they have compared to nearly any other current nation, and every nation, culture, or people, throughout all of human history.
Rick is generally correct, the reality is that you’re just generalizing, and then demonizing. The boring reality of 99% of the “wealthy” are those people who are still at the office when everyone else goes home, only to have to hear those people who go home early later claim the wealthy are entitled, or greedy, or other such nonsense. Compounded over 10-20 years, not surprisingly they build a substantial career.
If you types spent that much time trying to build a career, a business, a market, innovate, etc., you wouldn’t have to worry about most of this in the first place. Too bad government doesn’t demand people do that with the same fervor it demands the the rich to pay for what they don’t want.
What’s false is to believe that it will be politically possible to balance budgets and reduce the national debt through spending cuts alone. Tax increases will certainly be needed. Therefore, the TRUE delimma is whether to tax those who can afford it, or those who can’t.
However, even spending cuts will tax those who cannot afford it. Do you really think a retiree living solely on Social Security, like so many of our elderly, isn’t greatly hurt by reductions to SS or Medicare? Whether he pays $100 more in taxes, Or has to pay $100 more for medical treatment makes no difference. He’s still out $100 he can’t afford. That’s the real delimma.
You were never supposed to live solely off of SS. It is/was a supplement, but people just felt the need to spend everything they have on bigger houses, new cars every 5 years and a bunch of general crap they didn’t need. If they had saved 10% of their income, NO MATTER how much you made, you would be depending on SS as your source of income. The poor get free everything so why should they care about the rich?
Ideally, SS will supplement your pension or other retirement income. However, for 34% of all retirees, it is at least 90% of their incomes. That 34% are by no means the spendthrifts you portray them. Instead, many of them worked hard all their lives, saved, sent their kids to college, and toward the end, just had some very bad luck. They were the ones who decided to expand their businesses and were blindsided by a recession, or had medical problems that were not only expensive (nursing home care is $10k/mo.), but prevented them from working or overseeing their companies that subsequently failed. Then there are law suits, divorce, and other combinations including depression and mental health issues that accompany watching you life’s work crumble in front of you.
If you can make yourself believe your portrayal of the poor among us as spendthrifts and the lazy leeching off our generosity, then you hope that perhaps you’ll persuade the rest of us to make them pay for the tax cuts which benefited you so greatly over the past thirty years at the expense of the poor and middle class. “Anyone but me!” Right?
A funny thing happened at the end of 2012. After 6 years of hearing how the Bush Tax Cuts only favored the wealthy, suddenly Obama is working hard to save and retain tax cuts for everyone under $250K. What? You mean those mean old Bush tax cuts actually also benefitted the poor and the middle class? Shocking!!!!
Take a look back 10, 20 or 30 years. Cite a year where 47% of the people paid no Federal Income tax. That number will be 49% this year and of course its rising.
So don’t buy into all that silly propaganda that there have been all these tax cuts that favor only the rich. Sorry….everyone benfitted and in the case of the 47% (n/k/a “the 49%), they did pretty darn well.
In my opinion, tax rates should be regressive rather then progressive to
give an incentive to the most productive to produce even more for the
coffers of the government, and thus maximizing potential. This
is what businesses do. They give their best customers their best rates.
While it would be nifty to have a system that actually rewarded people for creating more wealth, the reality is that that there is no way to create a truly regressive tax structure that doesn’t penalize the poor, create bizarre incentives at the margins (eg cannabilizing next years income for a lower tax rate this year), or (more likely) both.
The “cheapest” way to incentivize people to produce more is just to allow them to keep the fruits of their labor. IE, if you just let people keep what they make, that’s all the incentive they need to make more. Why should the gov’t be messing with people’s incentives to work anyway?
Correspondingly, the fairest tax structure is simply a FLAT TAX. Everyone pays the same. The way to make this non-penalizing for the lowest earners is just to create lower sub-brackets for the lowest percentiles of earners, or offset taxes for the lowest earners with a ladder of tax credits.
MOR….”leave out the fact that that same 47% pays much more than you in state and local taxes”………….How do the poor pay more in state and local taxes than the rich? The rich have more money to spend, they have bigger houses. Now if you are going to spin statistics and numbers, then you have to say the poor spend more as a percentage of their income, not that they pay more taxes. The poor can’t spend $100,000 a year on stuff so how in the world can you make that statement.
In the following sentence, I said that while the bottom 20% paid 12.3%, the top 1% paid 7.9%. I think it’s clear to all what I’m talking about, unless of course someone chooses to play dumb.
By the way, the comment you’re referring to is no longer here and I noticed that more than 50 others have vanished also. I can only assume that was done by MoneyNing.
Thank you MoneyNing for the opportunity to have excellent civil discourse. I learned a lot as I hope others did too. I understand your need to eliminate greatly offensive comments and personal attacks in order to maintain civility. However, you’ve removed way too much of what was well researched, thought out, and civil and therefore I can no longer play.
Adios to all!
MOR
Adios Man of Reason. I know it was hard to deal with the realties of our tax system and its inherent unfairness, not to the 49% percent that won’t pay any FITaxes this year, but to hard working Americans who work hard, disproportionately pay their taxes and who now are asked to pay even more.. It was probably even harder to have to read all the bloggers who told you their own stories of how they worked, sacrificed and took risks to build a successful career or business. These same people told you how tired they were of paying and paying and now being asked, while being demonized, to pay even more while the segment of non payers in this country grew even larter.
In your mind its not fair that such people end up supporting themselves and their families, typically in a fashion better than the previous generation. For those of us old enough to remember, that used to be called “The American Dream,” and it built our country from a few small colonies of misfits, into the world leader; a place where immigrants longed to reach so they could seek their own opportunities.
The Liberal American Dream is big government and handouts becoming so extensive and easily obtained that they provide a disincentive to work hard and succeed. And at the heart of this thinking and the current White House’s agenda is the use of wealth redistribution to fund it all. Who would have ever thought that a candidate for US President could have ever been elected while stating opening that wealth distribution from successful, hard working people would be the cornerstone of a winning campaign? And its all because too many people heard and believed the propaganda and lies that “Corporations don’t pay taxes” or “Rich People don’t pay taxes” or “Rich People Don’t Pay Their Fair Share” or “Rich People don’t deserve what they make or what they have” or “Rich People should pay more simply because they can.”
Too bad there was not a campaign referee who could throw the yellow flag and decree that the label “Successful, hardworking people” be substituted at all times for “Rich People.” I wonder if the result of the election would have been any different.
I can only hope that the USA can survive 4 more years of this mess and that we are strong enough as a nation to move back to pursuing the true American Dream. But any future success does not lie in bigger government and free money and benefits, but in a change in personal attitudes with each and every American not only on their own job or career, but in how they raise their children.
Love it – well said.
Did you actually write that???
“Now if you are going to spin statistics and numbers, then you have to say the poor spend more as a percentage of their income, not that they pay more taxes.”
It is not the amount of tax paid but the amount of your income that you get to keep
Let’s make this simple!! If I earned $10 dollars working for you. While you earned $100 dollars for watching me do my job. Then we are taxed equally at 20%. I would pay 2 dollars while you would pay 20 dollars. Then I buy lunch and it costs $5 + 10% tax so it costs me$5.50 dollars. Now you buy lunch and it costs $5 dollars + 10% tax so it cost you $5.50. Now that me only 4.50 left or less than half of my income. you on the other hand have 94.50 left, that is still more than 80% of your income. That $.50 is equal to 1/20th of my income but it is only 1/200th of your income. Again, it is not the amount of tax paid but the amount of your income that you get to keep, so in effect the tax on that lunch was equal to 20% of my income while the tax on your lunch was equal to .2% of your income. This is the reason that the poor are taxed more. More of their income goes to taxes by a far margin than the wealthy.
For the record, my husband and I are both college educated engineers. We are paid well, save and invest some of our money. I am perfectly happy with the $450K per couple instead of the $250K. The notation that we can afford to pay an additional 1.5% in taxes isn’t the point. The point is why should successful people be penalized for that success. We don’t break the tax rules, or even cheat them…. we paid over $40k in federal taxes last year.
Cate,
The fact that you can afford to pay additional taxes IS the point. The alternative is to tax those who cannot afford it.
I can’t even IMAGINE being at a point in my life where I looked to others I didn’t even know (the government, the rich, the “system”) to help me get out of my current situation. In America, no less. It’s a bizarre mentality – and one that isn’t good for our country – and one that unfortunately Obama is perpetuating.
(And to clarify, I don’t think his policies perpetuate this as much as his speeches and rhetoric)
Where were you when I was working since 11 years old to feed myself with non-existent parents that fed their drug habits instead of me? But now that I make a decent living I somehow owe nearly 50% of it to government which never paid for my food, education, or living expenses. As to the common infrastructure, my taxes from the past 37 returns have always been submitted on time and without any error or blemish. The point IS that you simply want everyone else to pay for some guilt complex. I had a lifetime of eating mac and cheese and any other number of 25 cent meals. My family has never had to live the lifestyle forced on me. But somehow I’m the bad guy for not gleefully paying for a world of welfare.
“The alternative is to tax those who cannot afford it.” – This is flat out wrong, and it is the false choice that is being peddled by our disingenuous President. The much more reasonable alternative, that is not mentioned by him or his ilk, is to SPEND LESS.
Whether reducing the budget or taxing more, it really all about reducing the deficits and national debt. It’s about who pays too and that’s what you’ve been dancing around in this debate. You don’t want to pay. You want someone else to pay.
Reduce SS and Medicare and the elderly pay more. Reduce unemployment insurance and food stamps and those recently laid off pay. Reduce Medicaid, SSI and welfare and the very poor and disabled pay. Reduce the FAA, CDC, FDA, etc., and we all suffer. Reduce aid to education, student loans, Head Start and America’s future in a global economy fails. So don’t give me some simple minded solution of, “just cut spending”. Tell me where, who will pay, and why that’s more fair than asking those most able (You?) and for whom the past thirty five years of tax cuts became the bonanza that increased their wealth many times more than the rest of Americans.
Let’s face it. Of course the poor pay a higher percentage of their income to taxes since they don’t make much. It is disingenuous to really think the poor could save 10% of their income when a majority of their income is spent on ‘taxes’, except that they get free food, subsidized housing and other gov’t benefits that don’t count as income. So yes, making $20,000 a year you pay a higher percentage of your income on taxes and food and cell phones. But there are plenty of people making $400K and above that don’t spend every dime they make and have a higher disposable income. The rich don’t necessary eat more than the poor. They don’t have to have a $70,000 car and they could buy a home where the mortgage is only 10% of their income. But the ‘rich’ have more choices and more freedom of choice BECAUSE they made better choices somewhere in the past that got them to where they are. I want to see a study of small business owners and how many of them were a parent before the age of 18, or how many HS drop outs are CEOs of companies. Your HS education is free and there are many successful people that were educated in community college. Education is the key to making more than $400K, but even Oprah and Clarence Thomas grew up poor and have made something of themselves, so almost anyone else can as well. I bet they also had something else inside them that drove them to be better. Not everyone has this ability. So don’t bash the rich for knowing more than the poor. Even if you make $25,000 and only pay 15% in taxes, you will get more back in benefits. If the rich person pays 30% on $400K, they will never get the benefits and service back that they put in. So the rich do pay for the entitlements of the poor. The rich just shouldn’t have to cover everything and they can’t as long as gov’t spends 1T more than they take in.
Quick comment on the small business owner topic. I know several SB ownerS personally, fairly well. They all worked very, very hard to get wheeler they are, which includes a very comfortable living after 5-29 years of work.
I don’t know if they make $400k. I suspect one does and the others probably (guessing) make $100-$300k. The one on the higher end might be lower, but as he told me just last week, ” I don’t pay myself that much but the company pays a lot of my expenses first.” Some random quotes I’ve heard from them;
(overheard on a call to his wife). “What? The camera broke and you new it for (kid) sport event? Go buy a new one. Get a nice one. No, use the company card. I might use it at work some time.
My daughters (22 yrs old. Does not work for him). cell phone broke. I had an extra at the office I just gave her
“I never wont own a business. I don’t care. I expense almost everything. I couldn’t quite figure out how to expense her engagement ring, but if I could have…)”. I think he was exaggerating but not by much
Travel? Almost all airfare and car rental on corp card. Most meals too. Add a meeting of some type onto every trip…
Is this legit? Loopholes? Cheating?
I’m not sure but these are just a small sample of what I hear regularly. These people run good businesses, take care of their employees, and I’m sure they pay plenty of taxes. But they manage their lives like this all the time.
Oh, btw, I know two sb’s where the owners are VERY straight arrows and probably take advantage of these tricks rarely if ever. I know at least 5 or 6 who use them routinely.
Ps- having problems with my phone browser. Sorry for typos.
But all of this spending on the company card comes out of their revenues at the end of the day. Not saying it’s ethical or passing judgement – but is buying a camera and expensing it more or less reprehensible than collecting unemployment while you lazily send out a resume a month? I know plenty of people that have played that game too….
Create a system and people are going to play it.
Ultimately, any corporate/business expenses “written off” this way just come out of earnings. The real world differences is that the earnings will be lower and the “written off” expense will not be subject to the 35% corporate income tax (or personal income tax for pass-through business structures).
In short, all these shady deductions do is act as a tax shelter for spent money. The higher the nominal personal and corporate tax rates, the more incentive there is for people to try and “write off” as much as they can.
When complying with Federal requirements are 50% (gross) higher per employee for ‘small businesses’ than the larger, then escaping the system is a matter of survival. Survival from regulations written by the large corporations, Mom and Pop don’t get the representation that the Fortune 500 do.
This needs to be addressed as since about 2000/2001, the increase in regulation is running about 6% and compounded annually. These regulations are written, some openly, some by advise, by the Mega Corps (there simply is not enough experience in the sectors for legislators to be competent to anything but legality issues) and is a major contributer to falling middle class
participation.
Our Congress doesn’t care about what middle America thinks. They pander to the poor to keep their entitlements and pander to the lobbyists to keep the subsidies going. The ONLY way to cut spending is an across the board cut to EVERYTHING so no one group can complain. Cut 10% in EVERYTHING. And to the person who thinks “we the people” can do anything, we can’t. The election process is broken. I can’t vote out a Congressperson that has nobody running against them. And they won’t allow a person from the same party to run. If this country cared, we would change the constitution to put term limits in Congress. If it is good enough for the President, it is good enough for Congress. I am even for a six year term in order for the endless campaign cycles to stop. 4 terms max in Congress and the Senate. I think 24 years would be enough to get something done if they knew that they couldn’t just keep kicking the can down the road.
True believers in so-called supply side economics prefer not to be troubled with the facts.
87% of he Bush II tax cuts that the democrats have been demonizing, have just been made permanent by Obama. The U.S. has one of the most progressive tax codes on the planet. In fact the lower 80% of tax payers in European countries pay about double the percentage of federal taxes as those in the United States do. Any attempts to extract more from the top 2% in this country will fail to raise revenue. Wealthy people like me have just seen our top marginal rates go up, but I will LESS in total taxes in 2013 than I did in 2012.
No way eliminating deductions is 8T in 5 years. Mortgage deductios will be less with historic low interest rates.
Forget raising taxes. Take away ALL deductions that are not related to caring for an additional person such as a child or elderly. This is $8Trillion in 5-years.
Tuition went up as soon as everyone could get a student loan backed by the gov’t. When enrollment went up, what was to keep the universities from raising tuition? Nothing. $85,000 for a degree is insane and any parent that allows a child to get an $85K degree should be shot.
JB, you are absolutely correct. Government can be good for protection, but there are a lot of consequences to the American citizen for government over-reach. The American government getting involved in the student and home financing businesses is an excellent example of this. The market will always respond to government actions; and almost always, it ends up hurting the consumer in the end.
How about taxing the monster size endowments that some of these schools have. Never mind the property tax they are excluded from paying. Havard owns half the property in Boston.
Everyone should pay some Federal Income tax:
First $5,000 at 0.05% = $25.00 (but its something)
Next $15,000 at 1.00% = $150.00
Next $25,000 at 1.25% = $312.50
Continue increments of income and rates to $250,000.00
Portion after $250,000.00 (or you name it) use 50.00%. They can’t make those large amounts without the rest of us. Perhaps we should protect Doctors more but
Attorneys less. Example; Doctors 50% after $350,000.00 and Attorneys 50% after
$200,000.00. Yeah – I know the Attorneys would just raise their rates sooner.
Dave — how about we just have the state employ everybody directly?
And maybe you could be the benevolent dictator / HR overlord who decides which professions are most (or least) deserving?
The thing that should be noted is the statement “600 billion dollars over THE NEXT DECADE” Part of the reason we are in this hell hole is that we constantly try to count on the furture. I realize we can’t clear this debt in one year, but taking this approach is very much a large part of the problem. Another clouding of issues happens with the borrowing by the goverment from the Social Security Fund. What most Americans hear is the the fund will run out of money in 10 or 30 years. They should be more involved with where the money went, and who allowed it to go that way. Perhaps if we made retired politicians and retired business leaders responsible for decisions they made when in power it would help to change things. Who knows maybe solving problems instead of postponing them would become the new order of the day. The pointing of fingers is, at best, a diversionary tactic. One that, sadly, is working all too well.
kapm
ken mason – two words to address this problem: term limits. The only way to stop politicians from stealing from the future to pay for their re-election is to limit the length of their time in office – eight years for representatives and ten years for senators. Furthermore, we should eliminate their defined benefit retirement and post-retirement health care plans, guaranteed by the full faith and credit of American taxpayers. Instead, let them depend on their savings, Social Security and Medicare to usher them into the Golden Years. I predict annual budget battles over deficit spending, piles of Treasury debt and unfunded OASDI liabilities would all disappear within an election cycle. The one thing all politicians fear the most – giving power to someone else to decide their own futures. Even Nancy Pelosi, Maxine Waters, and Charlie Rangel would lower their freak flags to approach the bargaining table. If not, we could all sleep better knowing the Confederacy of Dunces would soon wipe away three of its densest dunces.
Good point DanO. California has had term limits since the 80’s and look how well it turned out there.
We can add many school administrators and public hospital administrators to that list. SF pays one lady over $650,000 a year to manage ONE public hospital. She is not even a doctor!
The reality is the increase taxes on people making 400k pr year will not put a dent in the deficit and Obama knows it. So then why do it? Because it plays to his constituents that voted for him which includes everyone that gets the most benefits from the government in the way of food stamps, welfare, section eight housing etc. He knows it will not make a dent but as I point out above is the real reason. Blame the evil rich people who already pay more in taxes than everyone else.
Obama says everyone needs to pay their fair share In his mind he thinks that means of the roughly 50% of people who pay zero federal taxes that they continue to do that while the people who already pay the most are asked to pay more. To me paying your fair share means everyone pays something.
The 50% that pay nothing would argue with me saying they have federal taxes taken out of every check. True, but you get all of it or 90% back every April and is especially true if you have kids because of the child ax credit.
The fact is this administration has been in office now a little over four years and have not passed a budget. Obama is now upset because of the upcoming sequestration which will take effect on 1 March. Republicans need to stand their ground and let that happen. So what if Obama blames the right, the fact is if Obama does not want this to happen then he will come to the table with specific cuts that go in to effect ASAP. Do that, and sequestration is not needed.
However, it is easy for the left to cut the military DOD etc because it sure beats making cuts to entitlement spending. Oh no, cannot do that. Instead let’s take money from the soldiers, sailors, airmen, marines and he civilians that support them instead. These are the very people who give their all to this country yet we treat people on welfare, food stamps, section eight housing better than them.
You think things are bad in Greece? Wait until about 4 years from now when we have about 21 trillion in debt and then no choice austerity measures are in place.
The democrats are socialists bent on spending this country in to destruction. Those are cold hard facts and can be proven by the spending they are doing right now without a budget, without any solid spending cuts etc.
If I were John Boehner I would not give in to the presidents demands of more revenue and I would let sequestration happen and then when it does I would ask Boehner to not shut up, but to say the president refused to propose any real spending cuts to take effect on 1 March instead of sequestration.
The fact is, Obama can blame the right all he wants to, but he is the one in charge not the republicans so it will be his failure.
All the comments were very thought provoking and interesting. But the fact that the cost of past,present and future wars has been the biggest U.S. item for many years was not expressed but is my favorite. Let’s quit fighting overseas wars now and save enough to fund all the necessary government programs and lower taxes in time. Our enemies? They couldn’t afford to take over our government and it’s debts!
Here’s something interesting, since many of us agree that we have a spending problem. If you look at the Obama years compared to the 2007 budget, they are very interesting.
REVENUE:
Revenue in 2007 was 2.5 trillion. Of course this dropped dramatically with the huge decline in the markets and economic slowdown of 2008. The years that followed saw revenue of 2.5, 2.1, 2.1 and 2.3 – and finally in 2012, we returned to the 2.5 trillion revenue number.
SPENDING:
Imagine this is your household. You get an instant 20% paycut at your job. What do you do? Cut expenses? Well, take a look at what we actually DID do.
2008 spending – $2.9 trillion (the highest spending year in history up to that point)
2009 spending – $3.5 trillion
2010 spending – $3.5 trillion
2011 spending – $3.6 trillion
2012 spending – $3.8 trillion
Now we would all love to (including me) explain away the increased spending on the bailouts and other economic stimulus. However, that’s not the reason. Looking closer at the 2012 budget – and comparing to the 2007 budget, which was $1.3 trillion LESS – what were our increased expenses?
Spending increases from 2007 to 2012:
Welfare, Unemployment & Housing/Food Assistance +214 billion
Defense +165 billion
Health Care +95 billion
Commerce & Housing Credits +80 billion
Social Security +72 billion
Veterans Benefits +57 billion
Education +48 billion
Transportation +30 billion
International Affairs +28 billion
Energy +24 billion
Justice Administration +20 billion
General Government +14 billion
Natural Resources & Environment +11 billion
Space Programs +7 billion
Agriculture +2 billion
Community Development +2 billion
Net Interest -12 billion
My question is … what the **** are we doing???? STOP!!!!!
You are absolutely correct that we’ve got to get the national debt down and balance the budget. I think congress and the president all know this. The problem is that right now we have a very fragile recovery and stubbornly high unemployment which will be adversely affected by drastic austerity measures like we’ve seen in southern Europe. Therefore, all actions must be slow and deliberate at this point. They may accelerate as the economy gets better, but it will take many years to balance the budget and pay down the debt, just like it took many years of idiocy to get to this crisis.
When looking at the figures, you need to put them in perspective by adjusting them both to inflation, productivity, and population growth. One way to do that is to compare spending to GDP. The picture is much more encouraging when that’s done.
Federal spending as a percent of GDP looks like this:
2008 20.76%
2009 25.24%
2010 23.82%
2011 24.09%
2012 24.33%
2013 23.28%
GDP shrank in the Great Recession of 2009 making the spending, planned and passed by the previous congress and signed by Bush, a greater percentage of GDP. However, except for slight upticks in 2011 and 2012, the trend is down under Obama. As GDP continues to rise (expect 2.5% in 2013), and planned spending cuts kick in, the trend will continue down for the next few years.
Estimated federal spending as percentage of GDP:
2014 22.63%
2015 22.33%
2016 22.47%
2017 22.25%
Afterwards, the spending will increase as the Boomers retire and exert upward pressure on Social Security and Medicare. If you are a Boomer, you”ll probably want tax rates or FICA to increase. If not, or you’re wealthy, you”ll scream for spending cuts, especially to Boomer entitlements. Regardless it’s a balancing act, as in balancing the budget, and congress has wasted too much time already. Time is running out.
Making some huge assumptions here – that GDP will rise at 2.5% in 2013 (and presumably beyond) and that spending cuts will actually happen.
I ignored the last paragraph as you were telling me what people who aren’t you are going to want/think.
My post was full of facts. Yours was full of estimates and conjecture. No real point arguing with you with those ground rules.
Peter – I believe we are all mature enough to realize that any figures alongside the years 2013 and beyond are estimates and not absolutes. The fact is, however, that the figures are the best estimates from a non-partisan government site and therefore, meaningful. The figures alongside the years 2012 and before are hard fact, just like yours, so don’t tell me I included no facts. Those were ancillary to my main point however so ignor the government estimates if you wish.
Spending always increases during and after recessions to support those adversely affected, and also to stimulate the economy. Check out what Reagan did in 1981-82 and what Bush did in 2001-02. This recession has been especially deep and recovery especially slow and fragile. (is that “conjecture” or fact?) According to economists and even legislators on both sides of the aisle, to suddenly cut spending as you suggest, would plunge the economy back into recession with a corresponding increase in unemployment. (Witness reactions to the Fiscal Cliff and Sequester.) So here are the facts according to a consensus of reputable economists.
1. The previous Republican administration ran the economy into the ditch with tax cuts, spending increases, and deregulation.
2. Spending cannot be cut greatly without depressing the economy and increasing unemployment.
3. Cutting spending, therefore, would be foolish until greater growth reappears.
4. Obama is no fool.
Just reading this back today and think #4 might be a debatable point now in retrospect. 🙂
Our Founding Fathers never could have foreseen something called retirement, social security, credit cards and welfare like we have now. People were probably ashamed to take gov’t services instead of picking themselves back up. Some old fashioned things should come back. People had to save money back then.
SMALL BUSINESS OWNERS.
You know, the kind that Obama declared war on with his absurd tax hike. The ones like me who have had to lay people off to afford Obamacare and the aforementioned absurd tax hike.
4 jobs gone, thanks to Obama.
“Fair” only exists in fairy tales and liberal speeches.
Life isn’t fair.
Work harder, and make your own success. Don’t tell me it’s impossible. I’ve done it myself.
I’m the son of dirt poor immigrants from eastern Europe. My father has an 8th grade education and worked six days per week in a steel factory until he retired.
I have no college education because we couldn’t afford it. I graduated high school in the 80s, worked crap jobs for 20 years, saved my money, started my own business a decade ago with my saved money, worked my butt off 60+ hours/week, kept saving my money, kept working hard, and sold my business last year.
No one ever gave me a dollar. Yet my taxes far exceed 50% of the money I earned as a result of the sale. You tell me what is “fair” about parasites enjoying the fruits of my labors at a higher rate than I did.
I guess “I didn’t build that”
/spit
Do any of you realize that while Romney is paying 13% effective tax rate, it is still like $5,000,000 a year and when he turns 70.5 that money in his IRA that has been accumulating will be taxed and he will be paying approx another $3,000,000 a year? The money has to start coming out of the IRA since the gov’t won’t let anyone shield tax deferred money forever. And our public education system is FREE!! If someone doesn’t take advantage of the free breakfast, free lunch and all that it offers, that is their problem. Life isn’t fair. If 100% of people were High School educated, there were still be smart people and lazy people. There aren’t enough jobs for everyone and there certainly aren’t enough high paying jobs for everyone. That is life. I would think it is easier to go from lower middle class to middle class than from upper middle class to upper class. Not everyone is smart enough to be a CFO/CEO, not every company has one. If you think it is so easy to start and build a company and get millions of stock options, then go out and do it. What is stopping you besides your million dollar idea? Isn’t that everyone’s goal is to have a great job and make enough money to have some freedom? So what if 1 freaking percent % (which really, the uber rich are like one tenth of 1 percent) have more than you. Do the best with what you have and figure out how to do better. Not every person born into a wealthy family lives a life of joy and happyness. Money is the biggest root of many problems. Investment Income is different than Working Income. My goal is to have my investment income generate my working income. Not everyone will achieve that goal. But stop tell us the rich need to pay more. We pay the most and get the least gov’t services in the entitlement programs.
“Life isn’t fair” is a cop out JB. All of us need to fight for “fairness” regardless of the futility. Taxes are about sacrafice, about pain, not about how much a billionaire pays. Progressive taxation is most “fair” as not only advocated by the “Greatest Generation”, but also by Thomas Jefferson and the author of capitalism, Adam Smith. Your cavalier inability to empathize with those less fortunate than you is remarkable.
Nobody has time and resources to “care” about every single poor person in the US. I can’t control what kids drop out of HS. I can’t control what 16 year old gets pregnant. I can give money to charities that help, but 95% of people just don’t have the time or ability. If you dropped out of HS and have 3 kids by the time you are 21, guess what, that wasn’t my fault, it was the persons choice. You can’t control the environment you are born into, but plenty of people have risen up and gotten out. So how many HS dropouts have you hired, if you hire anyone? How many HS dropouts are working at your place of business? Why aren’t you out there helping all these people get a better education and get the skills to get better jobs? I help people that WANT help when I can, but I am not going to give every homeless person $100 and I am not in a position to give them a job, even if they were capable of keeping one. You can’t give out free cars to everyone that needs transportation, and I know firsthand how hard it is to take public transportation in a large city where the bueses don’t go where you need them to in timely fashion. I have seen first hand the stupidity of someone screwing up and losing job after job because they can’t control their drug and alcohol habits and not willing to seek help. So by saying Life isn’t fair doesn’t mean I don’t care, it mean life isn’t fair. What is fair about someone making more money than you? They have skills you don’t. Is it fair that I managed to finish HS and have the grades to go to college? Is it fair I was able to work my way through college? Is it fair a plumber makes more than me? See, I don’t run around caring what other people make because I know what my limitations are and I know what my abilities are. I will never be a CFO or CEO. I will never run my own business, I will never be a point guard in the NBA and I will never be an astronaut. We are all born with certain DNA that push us toward certain things and you can’t tell me that someone that is poor can’t rise up and make it out of poverty and get a decent job. Does the ‘good old system’ still exist? Yes, but let’s face it, how would you propose to take people living in gov’t housing and get them decent job? They have to WANT to get out of that system, and while the rich keep paying for the entitlement and as long as they can live off the entitlements without having to better themselves, they won’t, unless you have that person that WANTS to get out of it, and I would certainly be willing to help out a person like that. And BTW, you have no clue who I help, where I donate my time to and who I donate my money to. How much do you “fight” for fairness for the poor? Are you out tutoring the illiterate? Are you allowing kids from the inner city to intern at your company? So before you say I have an inability to empathize for those less fortunate, why don’t you GFYS before you throw out personal character assessments behind a computer. Well all throw out generalizations about the evil rich and the unfortunate poor, but I haven’t seen many personal attacks in this thread.
Point in fact, Romney’s 15% dividend tax rate is applied to money paid as dividends from corporate profits. American corporate earnings are currently taxed at 35%, the highest nominal rate in the world.
So the EFFECTIVE tax on the money Romney (and other dividend earners) collect is actually **50** percent. . .quite a bit higher than the simplistic “rich people pay peanuts” analysis would have you believe.
Or should I say it WAS 50 percent. . .now with the Obama 5% tax increase, and the Obamacare 3.8% tax increase on dividends and capital gains, dividend taxes have risen by a whopping 58% to 23.8%.
Add back in the pre-tax 35% Federal corporate tax bite, then tack on STATE income taxes, and the EFFECTIVE tax rate on dividends can easily reach 65% or HIGHER.
Again, at what point are people allowed to keep some of the money they make?
— There is no reason that dividends or capital gains should actually be taxed at a lower rate than actual wages or bank interest. Why should Romney pay 13% in taxes on much more income than Obama who paid 20%? —
Actually, there is. Reducing taxation on dividends and capital gains to the investor is supposed to encourage investing and saving. And if we really want to talk “fair”, dividends shouldn’t be taxed at all since they are already taxed at the corporate level.
Do you realize that the reason Romney’s effective tax rate was so low was because of two primary reasons – 1) he has most of his money in municipal bonds and 2) he gives a great deal to charity (mostly to the Mormon church, but still charity)
1) Muni bonds are tax free because the money is used to fund important projects at the state level. This is a good thing. Make them taxable and it would it a lot harder to raise capital this way.
2) Isn’t giving to charity a good thing? Shouldn’t this be rewarded? Although I for one would like to see churches’ tax-exempt status lifted.
Encouraging investing and savings by reducing capital gains taxation is like saying reducing income tax will encourage harder work and savings. Sounds good, but isn’t borne out by historical data. Likewise, saying dividends shouldn’t be taxed is like saying that no one working for a corporation should be taxed because the corporation already paid the tax, or even that barbers shouldn’t be taxed since the customer already paid his tax on the money for the haircut. It’s just silly, although I know it’s what advocates have always used to justify this great loophole for business owners who take their compensation in dividends rather than wages.
The reduction in capital gains rates from ordinary last took place in the 80’s and was justified by the fact that much of the gains were due to inflation. Converting ordinary income now is a game played by the wealthy. Neither capital gains nor corporate dividends play much of a role for the middle class. To say that investment will be reduced if rates are raised is hogwash. What are they going to do with their excess capital, spend it on consumer goods and thereby strengthen the economy and reduce unemployment? That wouldn’t make much sense for these folks, would it?
As for Romney’s tax returns, the following was copied from a major news source:
“WASHINGTON — Mitt Romney paid an effective tax rate of 14.1 percent in 2011, according to a tax return filed on Friday, a relatively low tax rate resulting from exotic deductions, the special tax treatment for his Bain Capital retirement package and the low tax rate on capital gains. Romney also opted not to deduct millions in charitable contributions from his tax bill in order to maintain a pledge from August that he has paid at least 13 percent in federal income taxes for each of the past 10 years.”
“A full 267 pages of the latest return are devoted to listing Romney’s investments in 34 offshore corporations and partnerships, including 15 in the Cayman Islands. Of the 34 offshore companies, 30 are located in countries considered to be offshore tax havens by the U.S. Government Accountability Office.”
1) There was no mention of muni bonds. I believe that if he has some, it must be very minor in comparison, and 2) notice that his contributions to his church didn’t factor in at all, although it raised his tax rate to 14%.
You fail to provide specific data to your broad all-encompassing statements. Most importantly and very revealing – your solution to everything is higher taxes, especially on “the rich”. You fail to offer the alternative – lower federal spending. It is fine that you are willing to help those less fortunate than yourself, how much of your income do you give to charities each year? I give over 15% of my income, not because it is deductible but because I believe I should give back as much as I can. However, I do not have the right to insist that you give 15%, 20%, or any amount of your property to my charities. This is the dividing line between those who pay and those who pay with other people’s money.
Okay DanO, what’s the difference between cutting taxes by eliminating Drivers Ed in 11th grade so that parents must pay $500 for their kids to drive, or keeping it and taxing parents of 11th graders $500? Both options reduce their standards of living by $500.
When you advocate reducing spending (although I’m not against reducing waste), it usually means reducing collective benefits which affect the middle class and especially the poor disproportionately. Therefore, the reality is that “reducing spending” actually means that the poor and middle class must reduce their standards of living even further to pay for the debt incurred to cut the taxes for the wealthy during the last 3 Republican presidents’ terms.
Oh, and I give a greater percentage of my AGI to charity (anonymously) and I’m sure a much greater percentage of my time.
—-The wealthier people are, the less percentage of their incomes are paid for their homes on average. The less paid for a home, the lower the property tax. That’s just common fact. —-
True, the point I was making is that property taxes shouldn’t play into this debate because that is a consumption choice. Even people who make much less still have a choice.
— You can’t just look at one tax and say, “That’s unfair!” without understanding a much larger picture of total taxation. If you think paying a larger portion of your income into federal income tax is unfair, then you must also crusade to reduce the regressive taxes that hit the poorest among us the hardest and out of proportion to their incomes. —-
Great point.
— Were this a family, we’d reduce discretionary spending, take a second job, and even have the wife work if she doesn’t already. —-
The problem with this is our definition of discretionary spending. I think sending money to other countries for aid, funding the arts, fighting unnecessary wars, beefing up an already unbelievably powerful military, spending money on space programs, and of course all of the other greasing of palms that goes on with insurance companies and Medicare.
Plus, why can’t we raise revenue in other ways that don’t slow our economy? For instance, legalization of marijuana could be a significant move to increase revenue AND reduce costs. The same could be said for regulation of internet gambling. Why must the answer on the revenue side ALWAYS be that the rich guys should pay more?
— Try taking away many of those services such as Medicare, Social Security, or even military bases, and you’ll see many who said, “cut spending” revolt to the degree that little will be cut. —
I don’t think there would be a revolt if you told everyone under 45 that their new retirement age to receive SS and Medicare is 70.
— Unfortunately, the poor have the least say so so that they will be hurt the most as their programs are eliminated. —
Actually everyone gets one vote, and you could make a legitimate argument that the “poor” coming out in droves in recent elections plays a role. People that rely on this government assistance will continue to vote for the continuance of it, don’t you think? The problem is that they don’t realize that if these programs bankrupt our country, their situation will become much more dire.
— As for fair, ask yourself what opportunities and freedoms we want to guarantee ALL Americans. Does the poor kid, the middle class kid and the kid from the 1% have and equal opportunity to develop all the talent he possesses, equal access to education, medical care if sick, a good job if qualified, equal protection of his property, etc. To me, that’s what I believe is fair. —
Two points here. First of all, you didn’t mention retirement as a “right” or opportunity. So, why do we have social security?
Secondly, I don’t think my kids should have the same opportunities as everyone else. I have worked hard to provide my kids with BETTER opportunities. Why should I be penalized? Let’s take a simple example. Let’s say my kid is really good at basketball and so is a kid from a $20k/year household. I am going to be able to afford to put my kid in training, play AAU, keep them actively involved and going to camps, workouts, etc. Additionally, my wife is not working so she is available to take my kid all over everywhere to get the best opportunities. The kid from the $20k/year household wouldn’t have the same luxury. That’s life….. and there is no way you can equalize that.
However, I am sympathetic to those (including family members) who aren’t as fortunate. This is why as a society we constantly help each other out (just in my basketball analogy, there are thousands of volunteers willing to work with youth, the Boys and Girls Club, YMCA, etc.) It’s an illusion to think we will all have the SAME opportunities. But I would prefer for society to look out for each other rather than have the government TAKE my money and then misappropriate it and use it for what helps someone get reelected. THAT is what happens.
“True, the point I was making is that property taxes shouldn’t play into this debate because that is a consumption choice. Even people who make much less still have a choice.”
You’re right that there is choice, but only for those who make more money than the guy I featured buying a $160,000 house. No decent house is that inexpensive in my community, and at $40,000, he wouldn’t qualify for a more expensive house. He has no choice. Regardless, such choice doesn’t matter anyway. Whether billionaire Warren Buffet lives in a $160,000 house and billionaire Bill Gates lives in a $16 million dollar house isn’t the point either. The fact that those with the least income pay more relatively is the reality and the point. That’s regressive taxation.
– “The problem with this is our definition of discretionary spending. I think sending money to other countries for aid, funding the arts, fighting unnecessary wars, beefing up an already unbelievably powerful military, spending money on space programs, and of course all of the other greasing of palms that goes on with insurance companies and Medicare.”
We are mostly in agreement here. Eliminating money for the arts would save very little however, and the 1% of budget spent on foreign aid is meant to reduce the amount we spend on the millitary and wars. It’s kinda like “An ounce of prevention….” I greatly agree with the rest of what you said which would save a tremendous amount more than where we disagree.
– “Plus, why can’t we raise revenue in other ways that don’t slow our economy? For instance, legalization of marijuana could be a significant move to increase revenue AND reduce costs. The same could be said for regulation of internet gambling. Why must the answer on the revenue side ALWAYS be that the rich guys should pay more?”
So, what does marijuana do for our society? There is nothing that it does for American productivity. Quite the contrary, it has no socially or economically redeeming value. Taxes on alcohol don’t cover the cost of alcoholism, but we can’t eliminate it in our culture because it’s pervasive, regardless of logic. I’m not sure if we need to add such non-productive drugs to our accepted culture (although in the 70’s I did enjoy). I do agree that gambling on the Internet should be either eliminated or at least regulated.
– “I don’t think there would be a revolt if you told everyone under 45 that their new retirement age to receive SS and Medicare is 70.”
Perhaps you are right, but from personal experience, our required private insurance rates would skyrocket should they have to cover people from 65 to 70. We’ve got to pay for it one way or another, an Medicare has proven to be less expensive.
– “Actually everyone gets one vote, and you could make a legitimate argument that the “poor” coming out in droves in recent elections plays a role. People that rely on this government assistance will continue to vote for the continuance of it, don’t you think? The problem is that they don’t realize that if these programs bankrupt our country, their situation will become much more dire.”
Agreed. However, the more wealthy you are, the better organized you are and better able to influence the vote. People vote what they think is “right” more than they vote their interests. It’s a lot more about emotion than logic, and money buys the commercials to influence that emotion, something not lost on politicians. They now vote according to how it will effect their campaign contributions rather than what their constituents believe.
– “Two points here. First of all, you didn’t mention retirement as a “right” or opportunity. So, why do we have social security?
Social Security is an obligation, an entitlement, or a “right” if you want. You paid into it and you are ENTITLED to collect according to what you were promised. Even Ayn Rand collected Social Security. We have Social Security so that the elderly can live independently with dignity and securely
– “Secondly, I don’t think my kids should have the same opportunities as everyone else. I have worked hard to provide my kids with BETTER opportunities. Why should I be penalized? Let’s take a simple example. Let’s say my kid is really good at basketball and so is a kid from a $20k/year household. I am going to be able to afford to put my kid in training, play AAU, keep them actively involved and going to camps, workouts, etc. Additionally, my wife is not working so she is available to take my kid all over everywhere to get the best opportunities. The kid from the $20k/year household wouldn’t have the same luxury. That’s life….. and there is no way you can equalize that.”
No one especially cares the advantage that your kids get because you can afford extra coaching for athletics. Good for you. But “wasting a mind” because some middle class family can’t afford college for their mathematically talented child is bad for America. It may be life, but it’s self destructive and stupid in a global economy, and it’s happening more now than ever.
– “However, I am sympathetic to those (including family members) who aren’t as fortunate. This is why as a society we constantly help each other out (just in my basketball analogy, there are thousands of volunteers willing to work with youth, the Boys and Girls Club, YMCA, etc.) It’s an illusion to think we will all have the SAME opportunities. But I would prefer for society to look out for each other rather than have the government TAKE my money and then misappropriate it and use it for what helps someone get reelected. THAT is what happens.”
Government is US. We, government, and society are all the same. That’s what the Declaration of Independence and our Constitution enshrines. Regardless of whether there will always be injustices or inequalities or unequal opportunities, it doesn’t mean that we should not continually battle to do what’s right. Although churches and non-profits have a great role to play, (I’m the CEO of the oldest UCC congregation in America) they can’t come close to resolving the problems. It takes ALL of us to solve these problems. Your heart is in the right place however.
“Government is US”? Sure, the Declaration of Independence and Constitution enshrine that. That has no bearing on present day reality, however. Government is a fascinating blend of political whores, hopeless incompetents, greedy sycophants and narcissistic egomaniacs.
So often people shake their heads at the “stupidity” of our leaders. None sense! The utter failure of our government has nothing to do with stupidity. It’s by design. Government derives its power from the ills which they are called upon to resolve. Resolve these ills and their power decreases. This is why the “war on poverty” did everything possible to ensure that poverty would increase. This is why health care reform did everything to ensure that the cost of health care would continue to skyrocket.
Did you ever notice that the only reason Roe V Wade is still the law of the land, is because of the votes of Republican appointed justices? How could Bush have been so stupid? Poppycock! He was brilliant! Kept his base while stabbing them in the back. Should abortion have been outlawed, Repubs would have lost a great battle cry and Dems would have been emboldened to turn out en mass. This simple principle applies to just about every political problem we face. Our leaders don’t blunder and fail to fix problems – they work hard to design solutions which will exacerbate the problems.
So Kenn, you think it’s all a conspiracy done in back rooms and kept secret from the public by a shadow government. And even though we have a free enterprise system and every media source should love to profit from breaking such a story, they don’t because they are all in on the conspiracy too.
Now, exactly how did they get those many thousands of politicians and news people to keep the secret? Oh yeah, and how did you find out without being assassinated?
Everyday, lobbyists line up at the doors of Legislators(get there before 9am or bring more than 5000$(2006-2007 averages.)There is no shadow.
We do not have a free enterprise system, we have a system free to crony-ism (be at the door by 9 am.).
Every MSM outlet is owned by major commodity and manufacturing companies… whom lobby(be at the door by 9 am.)
It is legal for the MSM to say anything, there is no ‘fair doctrine’ . Mr. Smith does not exist or to Washington any longer.
Frankly, I’m surprised anyone would think the issue worth assassinating anyone over as it is common knowledge. As far as claiming it is a conspiracy, it is not. It’s just the way things work. No reason to make up exclamations about it. Heck, the governments own research shows the average(some get more, some get less) lobbying ‘donation’ is 2.5 million per legislator.
That is before ‘insider benefits’. Nancy Pelosi, Bush… all have and continue to use ‘insider’ or even direct all the way down to State level decisions, where tax dollars are allocated… not so oddly enough, in sub-sectors and companies they are vested in.
I’m really surprised you would claim this well oiled system we have a conspiracy.
Mike, It was tongue-in-cheek.
Saying marijuana has no socially or economically redeeming value is way off the mark. Do you realize the amount of money (untaxed money) spent on pot? It is obviously a very large sum in the billions. And that is just for recreational use. It doesn’t stop there. How about the money the tax payers would save on enforcement of unenforceable laws, on incarceration. The burden on our judicial system would be lifted. There would be many less jails filled with people just minding their own business. Not to mention the commercial uses of the many other products derived from hemp. Did you know that hemp grows faster with higher yields and a better quality of bio-fuel than corn. There are many industries that would benefit the reforms and legalization of marijuana. If it were legalized like alcohol, more people would use it instead of booze, and there are all sorts of savings on that front also.
The most amazing thing those that say Mj would not provide benefits is they seem to willingly ignore at will, while espousing Mj capable of being as in the same ballpark as Alcohol, in lost wages and social health care, is that Mj does not kill 24,000 people a year. If a product can kill 24,000, it surely costs many times over in health care than a product that does not kill.
This is a basis, picking one ‘poison’ over a product not a poison. No one can tell me many Alcohol drinkers would not stop Alcohol for another less harmful product. It goes against all reasoning.
Also, much of the taxation benefits, for ‘Tax- Regulate”, will not happen as less Alcohol consumption= less Alcohol taxes. It may not be a wash, but then, Mj product pricing might also collapse= less tax revenues.
I do agree with you that what is most often refereed to as a sideout/ancillary/second benefit, Hemp, could well be much more of a active product in terms of dollars than Mj ever would. After all, Hemp was the real reason money and political sway came into effect, Mj was just the excuse given (gotta love moral justifications!).
Very few people look at the Hemp issue from the point of the dirivatized and leveraged competitors view. But then, most people don’t care about Monsanto or other Mega corps giving them little choice in poor products.
Kind of like the two parties giving us little choice between poorly qualified candidates. Basing qualifications on anything other than political savvy, certainly not book keeping!
Politicians make book, on the 5% of the GDP in the Alcohol industry and chain. Along with those other sectors you mentioned of course. It’s simply a dollar issue for them (politicians), lots of ‘donations’ available from those sectors, very few from Mj or Hemp. So..’why change things now’ permeates Drug Policy decisions.
No, I would argue that paying 4.5% more in the top tax bracket is irrelevant – both to me AND the government. It’s estimate that it will generate an additional $50b to $80b in revenue. The deficit is $1.3 trillion.
I completely disagree with your assessment that Reagan’s cutting of the top tax rates drove up the national debt to unprecedented levels. Revenues actually doubled during Reagan’s presidency. The problem is that spending went right along with it. In the next 25 years, revenue has continued to rise (to 5x the level of 1981), and spending went along with it. Our problem is a spending problem in my opinion – and it is not partisan. Reagan was just as guilty as anyone.
It’s particularly interesting to look at the Obama years. Once the market slowed after 2000, Bush started running deficits. Mainly because revenues decreased (they were flat from 2000-2005), yet Bush’s spending kept increasing. From 2002-2005 he added $1.3 trillion to our debt, simply by increasing spending during years of declining income. Who would do this with their own personal finances?
Then, Obama took it to another level. Sure, the economy went into a deep hole with the mortgage crisis, and due to all of the bailouts, Obama’s first year saw a $1.4 trillion deficit – in ONE YEAR. Of course, as things stabilized, revenues began to climb again – even without increasing taxes – but Obama kept spending, adding an additional $5 TRILLION to the debt.
I’m totally on board with progressive taxation. I don’t think the problem lies on the revenue side though. But all of the politics and media chatter sure do….
“No one is reviling you for being in the top 1%.” Are you kidding me? That is what this is all about right now. Attacking the rich who don’t pay their fair share, even though a simple application of Econ 101 tells you that taxing them will be a couple of drips in the ocean of the Federal Decifit.
And by the way, more of your silly conclusions that anyone who has a small business is cheating. Or that there are secret tax loopholes for the rich only. Oh brother!! Ok, I will play….so from now on when responding to you, my position will be that EVERYONE on welfare and social security and receiving workers comp is a slacker, cheater and faker who doesn’t desrve nor need these benefits and should be forced to live in the wilderness of unpopulated areas of the Western USA, to fend for themsleves like our Ice Age relatives of 25,000 BC!
Progressive tax is fine. But so is chocolate or wine, but if you eat or drink too much….its bad, potentially fatal. So going back to that same pot, over and over again, for a bigger piece every time….from the same group of people, is not going to work anymore. I recall a movie line: I’m mad as hell and I’m not going to take in anymore.
And by the way, did Jefferson think a progressive tax was a good idea? Perhaps, but in 1780 only property owners could vote and some states even weighed votes depending the amount of property ownership.
People don’t revile success unless ill-gotten. They do revile greed, taking more than someones entitled to at the expense of the weaker person. When legislation is influenced through campaign contributions by those who want tax breaks which result in their paying less of income in taxes than others making less, that greed. Taking advantage of tax breaks is not. There is no reason that dividends or capital gains should actually be taxed at a lower rate than actual wages or bank interest. Why should Romney pay 13% in taxes on much more income than Obama who paid 20%? You can bet that some of those benefiting most campaigned for that. This isn’t a partisan thing either but just an example.
My conclusions are based on experience with conversations on the subject with many small business owner friends. As I said before, I only knew one who was completely honest and he didn’t stay in business. Almost all report income. It’s the expenses like telephones, transportation, meals out, even hotels and travel where they fudge. Tell me what percentage of your SB friends are completely honest with tax reporting Rick?
I never said, “secret loopholes”. Refer to paragraph one.
What is silly is to say that everyone cheats (there are shades of grey too.). But you know as well as I do that relatively few collect workers comp who don’t deserve it. Where I come from, it takes two doctors, one being completely independent, to verify a work related injury is serious enough to create a disability. Yes, a few get through with injuries off the job, but that’s very few. I do like your Ice Age suggestion however. It appeals to the primitive in me.
Oh, and may I caution you against being, “mad as hell…” they say that anger reduces the I.Q. by 40 points. Never make important decisions when angry – like who to vote for.
And, as for Jefferson, in 1811, two years after he left the Presidency, he wrote a letter to General Thaddeus Kosciuszko, a hero of the American Revolution. Jefferson said that he supported taxes (then tariffs, since there was no income tax yet) falling entirely on the wealthy. As Jefferson explained: “The farmer will see his government supported, his children educated, and the face of this country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings.”
Remember that anything that can be said will be said, but don’t be distracted by the very few ignorant post here that are seemingly hostile toward the 1%. Saying that an increase in the top rate is fair may differ from your opinion, but it’s not an attack on you.
I know a whole lot more small businss owners than you will ever know, and I know them professionally. I see their tax returns, deal with issues that cause their finances to be examined by forensic accountants etc… Do I think that they occaisionally write off a dinner or a trip that has a personal enjoyment component in it? Sure, I am not naive. But the bad practices that you claim are common with small business owners is not widespread. I suggest to you that you either have a bunch of cheaters for friends, or persons that are just telling you what they want you to hear to have a little fun at your expense.
But what I do know about 95% of them, is that they started with nothing, invested themselves, risked their homes and savings and college money for their kids, and worked crazy hours while making, in many cases less each year then many of their employees. And by the way, they made sure that those employees were paid FIRST and the owner paid LAST or not at all when circumstances were dire.
Oh, and by the way I also know that they all make their match share of each and every employee’s FICA calculation. Its funny, I always hear about employees who pay no FIT “But they are paying payroll taxes (meaning FICA).” Yet when a big corporation is accuesed of “Paying no taxes!” I wonder how the speaker gets away with conveniently forgetting that the employer/corporation pays the exact same “payroll taxes” that those poor employees have to pay to fund their social security beneifts.
You aren’t attacking the “rich?” Well you only call them/us greedy at every opportunity even when the top 20% pay in 80% of FIT. How’s that fair? How is that possible with all the purported loopholes? How is that possible with all the cheating?
Funny, no one in this blog ever wants to answer nor can they answer those questions and of course they can’t because the numbers don’t lie. I would love to take you out to lunch, order more food than you and then have you pay 80% of the overall bill and tell you, after you object that you shouldn’t be so greedy and should feel good about it. That would be our last lunch, I’m sure.
thank you for saying all of that. it is ALL TRUE. as a small business owner and knowing quite a few others…this is all a witch hunt so they don’t have to figure out how to reduce their spending. I started from Zero and built this company. and I pay plenty in taxes – plenty. and even more more taxes because of my employees…remember payroll tax is paid too in addition to the taxes taken out from the employee’s checks. Most business owners are let go and/or are considering letting go of employees because of these tax hikes which will mean that all of this will end up for nothing.
I am a small business owner too.
Didn’t Obama piss you off when he said “you didn’t build that”?
Derek, as a small business owner too, I know that you probably pay for you employees health care and now Obama want you to pay an additional 3.8% for others. This is stupid. We have become a Marxist country. Karl Marx said “from each according to his ability and to each according to his need”. That philosophy works well for ants, bees and termites.
BTW, there are two Peters in this thread.
@Peter … No, what pisses me off is when people take something someone said, and use it out of context. Like you did with the “you didn’t build that” quote.
What you wrote sums it up. To start our business we had to mortgage the house and my wife worked every single day for a year and half. Her employees got paid every two weeks but we did not get any money out of the business for two years. When she finally started to draw a salary it was below what she would have made working for someone else. After 5 years when the company started producing a real profit, we took most of the money (after tax $$$) and upgraded the facilities. So back to square one. Another 2 years later and money is finally starting to come in. Seven years to start making some money at the risk of our personal finances. We could have and still could lose it all. We started with nothing. We lived in a trailer when we first got married and drove old cars.
Yes, and then Obama say “You didn’t build that”.
To Peter above. Obama was speaking of roads etc that business owners and their clients and workers need to use to get to those businesses. He just didn’t word it right and had been taken out of context to the extreme. You didn’t build that road. You did build your company. Good luck to you going forward on the roads that all tax payers built.
sounds like you are involved in doing peoples taxes. your job should not exist. it does because a bunch of corrupt politicians write laws to give tax breaks for people that pay them. our economy has way too many people getting rich by taking advantage of those in lesser positions. if your business goes from nothing to a million dollars and you take most of it while your employees get basic wages you are an evil greedy baaastard … a system based on unfair compensation will fail. people are stupid.. but they will tolerate only so much. starting in 1980 the rich have gotten richer while the poor and middle poorer. we are seeing the collapse of our country because of unfair wage distribution. its that simple.
@Kenny YOU ARE SO RIGHT!!!!!!!!!!!!!!!!!!!!!!!!
Rick – Your argument that the top 20% pay 80% of all federal taxes is ridiculous and meaningless. The response to your argument is short and simple – the top 20% of earners pay 80% of all federal taxes because they earn very close to 80% of all income? Shocking, isn’t it?
Here is a site for you from the income redistributing office of the Federal government, called the IRS by the way. For 2010, it shows that the top 10% of earners pay in over 70% of FIT and the top 25% pays in over 85%. By the way, the top 10% (paying 70% of FIT) only garners 45% of the income. Shocking isn’t it. You might want to check some of the other “facts” that your liberal heroes use to exploit their class warfare agenda.
http://taxfoundation.org/article/summary-latest-federal-income-tax-data-2012
You’re wrong there. the top 20% make 99% of the income so the bottom 80 percent must pay the additional 19% that the biggest earners duck out of.
http://www.dailyfinance.com/on/Wealth-Inequality-in-America-viral-video-Politizane/
@Jeff
I know economics is difficult for liberals, but I must point out that you are wrong. The website you linked is about “wealth” not income.
Wealth is surplus income over time. Essentially, you said position and velocity were the same thing, that is incorrect. Two people with the same income can have differing wealths making your argument completely invalid.
But Romney DID pay more than 13%, he just didn’t pay more than 13% in personal taxes but anyone that owns stocks and is collecting money from dividends is also paying corporate taxes. To make this simple. If a small company has two owners and the company makes a profit of $300,000 and wants to allocate $100,000 to each of the two owners then they will receive only $61,000 out of the $100,000 because the corporate tax rate is 39%. Under the old law the owners would have to pay 15% of the $61,000 or $9,150. This means they only get to less than about $52,000 out of the $100,000. The old effective tax rate was about 39%+9.15% or 48.15%. That is a lot more than a secretary makes let alone pays in taxes. The media and the Romney campaign missed this fact. Allow the secretary’s 401K is not taxes the companys that the 401K invest in must pay outrageous taxes on profits before paying her any dividends.
The same goes for Warren Buffet. If you added up his share of the corporate income tax paid I bet the percentage isn’t that much different from my example above and the total tax he paid personal and corporate is huge.
Romney also had about $3 million in ordinary income that he would have paid the standard rates on (up to 35%) BUT he also had about $3 million of charitable contributions that offset that ordinary income. So crtainly a big part of why his effective rate was so low was because of his huge charitable contributions.
Romney refused to provide his income tax returns for several years. So how do you know what his charitable contributions were?
A large portion Romney’s charitable contributions went to his church
So what’s wrong with that?
PETER, Your argument lacks some reality. A c-corp likely would not exist as an s-corp with only 2 owners which skips the corporate tax and everything is paid as a normal income tax. The corporations traded on wall street are usually not run nor completely owned by the person(s) who started the business. Most people who own stocks have nothing to do with the day to day operations of the company which they own part of. In fact owning stocks after the initial I.P.O. actually does nothing to raise more money for the company except for those shares the companies keep on the books to sell if needed. Companies will often buy back shares when share prices are low in hopes that if or when share prices go up the company can benefit again. So the double taxation argument mostly doesn’t apply.
The situation is very real. We are a c-corp with just two stock holders. There were more at one time. Double taxation applies. It makes no difference whether WE are a c-corp or not. The problem is that stock holders of c-corps are taxed twice.
Down below in this thread there are those that what to include local taxes in what they pay but not the taxes the shareholders pay. It is liberal score keeping. On top of that I pay local taxes on the building through a small LLC. The liberals don’t want to count that either.
Peter, I agree that the corporate tax rate is too high, and it’s not just that your corporation pays 39% and GE pays nothing. A lower tax rate and few exemptions would raise more money and be more just. But The Tea Party would block anything that would raise tax collections — the likelihood of anything like that getting passed is close to zero.
If you are an investor you probably would like a solution where corporations pay no tax, and dividends were taxed at the present 15% plus 39%.
I don’t think the Tea Party would oppose closing loop holes in exchange for a reduced tax rate IF it were revenue neutral. The Tea Party is stuck on not doing anything until Obama makes entitlement cuts and and reduce the spending. Until spending is reduced the other changes won’t matter much.
The unfortunate thing is that the only think Obama and the Democrats what to compromise on is how much to raise taxes. They don’t want to do anything about spending. So I agree, we are stuck.
I agree that the company shouldn’t pay taxes on the dividends first. They don’t pay taxes on interest paid. I don’t see why there is a difference.
RE: Peter N
Obama has ALREADY cut spending, the Tea party is nothing more than a shill for conservative social engineering. They are all about budgets and deficits when they want to make a conversation redirect but don’t want to talk about details or even look at the REAL president’s record and proposals. Your assertion to the counter is wrong either ignorantly or deliberately. Either way, do your homework.
PS- as to your claim above regarding c-corp vs s-corp, if you are in the wrong organizational environment, that’s on you, not the tax law. Reorganize.
Eric, Obama has not cut spending.
Show me.
“Those fortunate few who make more than that amount will see their rates rise from 35% to 39.6%.”
MARGINAL RATES. quit saying rates will rise when only marginal rates will increase, i.e., the amount of income over $400,000 will be taxed at 39.6%. this article distorts the truth.
Marginal rates are what affect immediate behavior. For individuals who have the ability to work harder to earn more, its the marginal tax rate that affects the decision of how much more to work/produce, and the higher it gets, the more disincentive there is to increase production.
For example, I’m a specialist physician and my wife is a primary care physician. While neither one of us makes the vaunted “400k”, if my wife opted to work full time, combined, we could.
But with me already working 60 hours per week, why would she ALSO want to work 50+ hours a week for another $150k per year, when 40% of it would go right off the top to Uncle Sam, and nearly another 10% to the State? Certainly the extra $75k income would be nice. . .just not just not nice enough to offset the added stress, necessary extra childcare and other domestic expenses, and other costs of having a two professional working household.
As a result, she’s staying home, and there are 6000 fewer annual primary care patient visits available for sick and/or needy people in our area. . .a rural one that doesn’t have enough doctors.
I could add that each one of us started with nothing, have massive student debt loans to pay (the interest on which is not tax deductible at our income level), took me 10 years after college to complete my medical training (most of which involved 80+ hour work weeks at the per-hour equivalent of less than minimum wage) but that’s not really the point.
Here’s the point. Without even getting into issues of massive spending fraud and corruption at the Federal level, isn’t there something just fundamentally wrong with the Federal gov’t seizing nearly half of what people earn? What percentage of income should people be allowed to KEEP? Is it good public policy to create disincentives for people to create more economic value?
Dr. Marginal – thank you for a powerful example of how economically destructive a progressive tax system is. Republicans in general, Romney specifically, failed to make this important case in the onslaught of Obama’s non-stop disinformation and lies. The simple fact is this: the top 52% of taxpayers (including the that notorious 1%) pay taxes for themselves and the 48% who do not pay taxes or actually receive true un-earned income (a.k.a., welfare). What income did an individual have to earn to be included in that magnanimous 52%? Based on 2010 tax data – approximately $30,000 annually. How Democrats and leftist liberals have been able to deceive the average hard working American laborer, without fail, is beyond my comprehension.
In 1970 top 1% of the population got 9% of the income in USA. Today top 1% get 24% of the income in USA. In companies, top management is making lot more money compared to 30 years ago. How do they do that, by sending jobs to other countries, getting stock and stock options and dividends and cutting or eliminating pension and health care benefits to rank and file employees. The passive income was being taxed at 15% when earned income was taxed at a much higher rate. So the substantial income to these people is coming in the form of investment income and dividends. Now the tax rate on investment income has gone up to 20%. In my opinion it should be closer to tax rate on earned income.
In US, the salary disparity is higher compared to europe. For example Boeing CEO makes 20 million dollar a year, whereas CEO of a comparable (actually larger) company such as Airbus makes 3 million a year. But as a result, pay and pension benefits for non management employees is better compared to US.
What percentage of income should be taken in as taxes is a question that is decided by what society thinks, i.e. by voting. When 50 cents are taken as taxes (after a threshhold), people forget that 50 cents is remaining.
medicine is a special industry. There is no significant international competition to us doctors and surgeons. We should study why other industrialized countries spend half of what US spends in health care and the outcome is same. But the answers can be inconvenient to someone. My sister in law and her husband are doctor and general surgeon and I know few ICU doctors. There is lot of somewhat unnecessary money spent in the end of life care. Neurosurgeons perform complicated and expensive operations and dump pentients in ICUs. Old patient’s life is extended by 2-3 months. medicare pays and the chain of providers benefit; neurosurgeon, icu doctor, icu nurses, hospital etc.
In several countries (e.g. Australia), one can get medical degree in 6 years after 12th grade. In USA, it typically takes 8 years after 12th grade (4 years for BS + 4 years of MD education). Those doctors are doing fine. Now if you cut 2 years out of the long years, how much money will be saved for the student. But that will be inconvenient to education industry.
There is spending fraud at the federal level and that is in tax cut policy and defense spending and medicare and SS spending. There is shouting going on that SS may not be collecting enough money to pay for promised benefits. Actually over the years, SS tax money was treated like income tax and put in general fund of the US government. Over years, social security surplus was put in general funds and even then so much money was spent in defense and giving tax cuts that deficits were produced. Defense industry benefits when there is war. Imagin how much money/resources/ammo are required to support our fighting men in Afganistan and Iraq. And all that money was spent by borrowing it. The war should have been fought by puting a war tax on people. Also how many aircraft carrier groups do we need? USA has 11 aircraft carrier groups, Russia has a semi working one and China is working on a prototype.
The reason you don’t work extra, is you probably don’t really need the money. If you needed the money, she’d be working the extra hours.
So, Obama paid 20% in federal income tax when the rate is closer (or over) 35% for someone earning the $790,000 he reportedly earned in 2011. And let’s not forget that he is worth $11.8 MILLION thanks to Oprah hawking his books. He and his accountants aren’t that different from Mitt Romney and his financial team, are they?
Man-of-Reason not everyone who earns over $400k does so by raiding pensions or cheating people with Ponzi schemes. Some are senior executives like my husband who is responsible for bringing in hundreds of millions of dollars in business to keep 300 people employed. And because his bonus is directly tied to the work he puts in during his 14-hr days, he is now earning $400k. Before you start in on how he probably was born with a silve spoon in his mouth, went to expensive private schools, you couldn’t be more wrong. He came from less than NOTHING, studied hard, worked TWO jobs to put himself through college and has put in 14-hr days for TWENTY YEARS. And for that, because he didn’t bring more children into this world than he could afford to feed, house, clothe and educate, he and everyone else who works their asses off – and let me tell you, no one hands you this kind of salary without extracting a pound of flesh – now has to pay a higher precentage of their income in federal tax. How is that fair? Why should he pay a higher percentage of tax just because he can? And now our President says that deficit reduction isn’t practical after he used this argument to justify this increase in the first place? Are you kidding me?
Let me remind you that it was easy for Jefferson, like our President, to spout Socialist sentiments when he was probably one of the wealthiest men in the United States in his time. And while he, too, was a farmer, his slaves were the ones who got their hands dirty.
As for your SB owner friends, they had better be careful because every claim must be supported with a receipt. Most people get audited not because of a random INS draw, but because the tax cheat was reported by a neighbor or colleague. Write a letter and you just might end up with a cash reward.
Do you know that in the 1950s the number of Americans collecting disability was 53:1, now it’s 13:1. Cheating? What do you think?? Go onto YouTube and search for the Alexandra Pelosi video she did for Real Time With Bill Mahr. You’ll see 20-something strapping young Af-Am men doing PUSH-UPS while they wait for the Welfare Office to open in Manhattan. Why is he in line, one is asked? “To pick up my OBAMA BUCKS”, he replies. I.Kid.You.Not. So, since we’re now getting clobbered with a new tax rate tell me why I should not have fired the woman I have helping me with housework or the kid who cuts our lawn who is starting his own landscaping business…Oh, and that new car I was thinking of getting? Forget it. I’m driving this baby into the ground…
Dear Mom,
My congratulations to your successful husband. I know many like him, as well as many who’s success isn’t measured in terms of net worth and yet have worked just as hard and sacrificed much too.
So far as claiming expenses, you don’t need receipts to log mileage, and one friend actually insured a clunker car kept in a storage lot to claim as his family vehicle so that he could write off all expenses on his other vehicles used both for business and personal use. Of course, he had receipts. Most use business phones for personal calls, internet service for personal use, lunches out with friends as business meals, and even personal travel including vacations as write offs if they can reasonably claim some business purpose. Many claimed a primary office in the home (with seperate entrance) and therefore, all travel with company car could be justified rather than having to deduct travel between home and office. Setting up a corporation and paying themselves dividends on stock rather than wages also reduces their tax burdens, a maneuver the “worker bees” don’t have.
Rick claimed, as a workers comp attorney, he knows more small business people, sees their tax returns, and therefore, knows they are honest. That’s simply poppycock. Lawyers don’t want to know of the guilt of those they represent, nor do those represented especially want their attorney to know they cheat. Therefore, attorneys never ask and clients never tell. But, trusted friends do discuss such schemes and believe me, it’s very common.
You are mistaken to claim that I think that all wealthy folk are greedy, quite the contrary. However, I know of few greedy poor folk. Only the wealthy have that opportunity and are tried by that temptation. It starts with the self engradizing rationalization that only they are deserving. Only they worked hard, are smarter, sacrificed as much, and embody the American epitome of capitalistic success. They lose contact with the common folk, considering them inferior since they believe that monetary success is the only measure of success, and if they can do it, then everyone as deserving as themselves can do it to. Since, according to their world view, 99% of society fails to reach that level, they believe they are superior, and maintain the rest of society by providing employment for the worker bees.
Rather than seeing the vast majority of people as contributors to the economy, they begin to stereotype those less fortunate as “slackers”, “cheaters”, “stupid”, and undeserving of any benefit our government has to offer. Yes, you’re correct that there are indeed such people, just as there are greedy rich people who are undeserving of all the government provides, but you paint with too wide a brush and disregard proportion.
You don’t want to pay more in taxes. You don’t think it’s fair that someone so valuable to society as your husband should be penalized for his success. You fail to realize that along with his hard work, his country provided opportunities for him to succeed. Yet, you would close the door for such opportunity now because you’ve arrived. Progressive income taxation has been determined to be the fairest of all. It provided the resources to educate, protect, and allow someone who stared with nothing, to succeed. It gave America its middle class and assured economic growth that benefitted all. I’ll wager that the 5.6% extra that you are asked to pay on wages over $450,000 will be made up in increased sales and corporate growth. It’s called “trickle up” and proven to be what once made America the economic and democratic leader and example for the world to follow.
Dear Man of Reason. I have been very busy at work, but fortunately got notice of your recent posts. They reaquire a response.
Sorry, not a worker’s comp attorney here, but a Business/Tax attorney who talks to more Small Business owners and executives about their businesses in one week, than you talk to in one decade. So SB owners wouldn’t share details of their business with their attorney eh? Ever hear of the attorney client privilege? When a tax agency audits or assess, might those SM owners call their tax professionals?
In any event your underlying sarcasim in responding to the well written and passionate submission by Mom is patently obvious and frankly offensive. As usual in your mind, anyone who is successful has either had it handed to them by birth or by cheating. In your odd world, no one who is successful got there by hard work, personal sacrifice and investment or risk taking. And if you begrudingly acknowledge that some actually do succeed that way, its only because the “country provided the opportunities” that allowed success. Well, those opportunities are available to all, including those that pay no FITax. So there is obviously something different about the 1% or the 10% or even the 20%. And you just can’t bring yourself to admit that the difference is their committment to personal responsibility which got them where they are (and where others aren’t).
So to Mom and all the other small business owners, business and professional people who have expressed the feelings and told us their personal stories (and formula for success): I congratulate and admire you and hope my kids use you (and even me a bit) as their role models. I hope they don’t choose to rely on government handouts to take care of themselves, their spouses and their kids.
Man of Reason:
Also felt compelled to respond to your sentence:
“(Rich Small business owners ) set up a corporation and paying themselves dividends on stock rather than wages also reduces their tax burdens, a maneuver the “worker bees” don’t have.”
Lets see what’s wrong with that comment:
1. If a corporate pays its owner wages, the wages are deductible but taxable to the owner.
2. If a coporation declares and pays its owner a divident (in lieu of wages):
I really had to think about your response Rick. Why do you think I’m being sarcastic? Then it hit me. In your world view, I can’t be who I say I am. I must be the person you define as the offensive SOB who hates those who are successful, the ones who will be taxed an extra 4.6% on income over $450,000. I tell Mom that some of the wealthy secumb to greed while rationalizing it variously, and you define me as thinking that ALL wealthy people are greedy. Therefore, you cannot understand someone who holds no antimosity and even admires those who, through hard work and perseverance, have achieved financial success, yet still believes progressive taxation is fair. That doesn’t compute in your world because you simply feel no social responsibility, especially if that means you must contribute more. Therefore when I sincerely congratulate Mom’s husband (is that you Rick?), you think I’m being sarcastic.
In the future, hold me to what I say, but do not pretend to read my mind. I’m not your strawman. The issue isn’t me, it’s a discussion of whether progressive income taxation is fair and how the recent rate increase will affect the economy.
I was actually on the sidelines for much of this debate. However, two incidents made me write my senators, my congressmen, and the Speaker of the House. All of which got me on mailing lists…
first: I am at the local supermarket and the woman in front me pays with her EBT. Then she hands over her credit card to buy two bottles of grey goose vodka.
second: I watch a woman check out with nearly $200 worth of groceries, no problem right? And the she checks all those groceries into a Lexus LX470. Nice!
should note that that the EBT was used for the $200 worth of groceries.
Milton Friedman.
I volunteer at a food bank distribution, and bring home a box of food for a poor, disabled neighbor who can’t stand in line for an hour. It’s likely that the woman with the Lexus was doing something similar. If you really believe she’s cheating, take the license number and report it: you will be doing a service. But food stamp recipients have to jump through a lot of hoops.
Man-of-reason
What do you do that allows you to post to this one blog article 27 times on the first page of responses alone? You obviously have plenty of time to post and read all these responses.
You sound smart, maybe not intelligent; have plenty of business friends, but no friends to play with when you retired early; feel that most successful people cheat, but not willing to admit many on the government take are cheating too.
What gives?
Isn’t this a perfect example of the “straw man” argument?
“It starts with the self engradizing rationalization that only they are deserving. Only they worked hard, are smarter, sacrificed as much, and embody the American epitome of capitalistic success. They lose contact with the common folk, considering them inferior since they believe that monetary success is the only measure of success, and if they can do it, then everyone as deserving as themselves can do it to. Since, according to their world view, 99% of society fails to reach that level, they believe they are superior, and maintain the rest of society by providing employment for the worker bees.
Rather than seeing the vast majority of people as contributors to the economy, they begin to stereotype those less fortunate as “slackers”, “cheaters”, “stupid”, and undeserving of any benefit our government has to offer. Yes, you’re correct that there are indeed such people, just as there are greedy rich people who are undeserving of all the government provides, but you paint with too wide a brush and disregard proportion. ”
You are creating an imaginary person that you are battling with here. Mom never said anything that would have given you this impression.
Its interesting that you use mitt Romney as your example instead of Warren Buffet or George Soros. But youre not attacking anyone right? The reason investment income is taxed at a lower rate is to courage those with capital to invest it to further drive the economy. Which is one of, only one of, the reasons the economy stinks under Obama. He villifies the successful, unless of course he needs to go to LA or NYC for a fundraiser. Sure there arabuses everywhere and they should be safeguarded. Did you ever inquire how these big actors are psid? Do you think they get W-2 income and pay the highest rates? Or the Bruce Springsteins of the world? Who write off their horse farms as “agriculture investments” so his daughter can ride her horses at taxpayers expense. Oh those 1%?
Here is the problem with investment capital driving the economy that so many people seem to forget. Supply and demand! You can invest all the capital you want into supplying a given product or service but it will all be for nothing and add nothing to an economy if there is no one to market it to (demand). In other words what is the point of having all the money in the world to invest without anyway to grow it. Primarily because the consumers that demand these products have no way to purchase this good/service. This is because all of the capital is in the rich man’s hands. That is one of the main reasons for progressive taxes; to take all of the horded capital (that is doing nothing to grow the economy) and putting it into the hands of people who will actually use it. Spending is what grows the economy (I tried to write this in a way to make it understandable)
Now if we all want to argue about HOW the government redistributes that money (spends that money), well that is something I have more trouble defending. But that doesn’t mean progressive taxation has failed, it just means the people holding the purse strings are the true culprit.
@Thanatos – If someone that is holding capital is incentivized to invest it in a new venture, the new venture usually requires employees, hence new jobs, hence new demand. The government is usually just subtracting from this circle of life, and making it less efficient, since (as you point out) they are not very good at redistributing wealth in an efficient way. Your statement that the main reason for the progressive tax is to free up capital “in the rich man’s hands” is simply untrue–in fact, the opposite effect is true: the government is only taxing money being actively earned or invested–the only way for a truly wealthy person to avoid being taxed is by doing nothing with it–just horde it. The worse taxes get, the more incentive your dreaded “rich man” has to keep the money in his hands, than let the greedy government catch wind of it.
M-o-R – your arguments appear to be reasonable but are delightfully broken. There is a reason why dividends and capital gains should be taxed at different rates than ordinary income. Dividends are paid out of after-tax profits. Therefore, taxes have already been paid on that income and at the corporate rate. With regards capital gains, I am assuming you are referring to long term capital gains since short term capital gains are in fact taxed at the same rate as ordinary income. LT capital gains receive preferential tax treatment to encourage capital investment, a much riskier means of generating income than what most of us receive when we go to work each day. Yes, a successful investment of capital can result in substantially higher income but failure results in higher losses, if not a complete loss of capital. As you know from Econ 101, Americans benefit when individuals are willing to risk capital because our economy expands, generating jobs, profits and more capital investment.
Then, by your logic, the $15 I pay the barber shouldn’t be taxed either since I’ve already paid income tax on it.
Alaxkid – The barber has not paid tax on the $15. You paid the tax. It is your net income; it is the barber’s gross income. He or she owes tax on it after his expenses have been subtracted. As I explained, a company pays dividends out of net income (after tax income). Taxing said income again, as Obama and lefties cheerily demand, is double taxation. That is why it is called double taxation. Use your brain, kid.
Gosh DanO, I need to get this straight. Let’s say you received $15 as a corporate dividend. Like the $15 I paid the barber for my haircut, the corporation also paid taxes on that dividend from its net income (after tax income). But now you say that regardless of the fact that I’d paid the barber from after tax net earnings, the barber must pay more taxes, while you shouldn’t have to pay taxes on the dividend even though both dividend and haircut were paid for in after tax earnings. Furthermore, you believe that dividends are double taxed but when I spend the after tax money in my wallet, it doesn’t qualify as double taxation.
I don’t get it. Perhaps you can explain.
“Man-of-Reason” is giving “reason” a bad name… Why would anyone use the supposition that people cheat on their taxes as justification for raising taxes? It seems like the reasonable person would be more interested in eliminating the opportunities for cheating, than just hitting everyone with more taxes. But this whole crusade being led by Obama to fleece the earners in the country is not about reason–it’s about riling people up and appealing to their emotions. “Man-of-Emotion” might be a more suitable alter ego for you.
Aesir – You choose to deliberately misinterpret what was said. I read all of MoR’s posts and didn’t see anything about his justifying raising taxes because many small business people cheat. He simply said that more tax dollars are most certainly lost by small businesses falsely deducting personal expenses, or not reporting income, than by undeserving poor people receiving benefits they’re not entitled to. Therefore, claiming that it isn’t fair to ask those who make more than $450K to pay more (as many here have) because it only goes to welfare cheats is a stupid argument. I, for one, find his argument very reasonable.
Your angry personal attack defies reason. It’s really you who are the “Man-of-Emotion”.
Alaxkid – you may find man-of-poor reason’s argument reasonable because you are failing to analyze even simple aspects of taxation (the barber example), economic incentives and disincentives. The argument isn’t about taxes and why one group should pay while others do not; it is about providing incentives or creating disincentives to wealth creation . The more a government takes from the wealth creation process to redistribute to wealth destruction, the less there is to take in each subsequent round of taking. That isn’t to say that all governmental confiscation is bad but there is no mechanism by which the taking can be objectively controlled once it is underway. Eventually, this destructive cycle collapses on itself. We have the best example of its failure in the decline and collapse of the Soviet Union, Cuba, North Korea, and Venezuela. The reason China’s growth pattern did not follow those failed states is due in large part to its release of capitalism and the wealth creation cycle into its economy. Where China is likely to fail is in areas the central government attempts to control such as bank lending; the result has been enormous excesses and distortions in real estate construction and the emergence of ghost cities. Unwinding the Chinese government’s created real estate bubble will make the U.S. housing bubble look mild in comparison.
Thanks DanO. However, I’m still unclear about how raising the top rate to 39,6% for family income exceeding $450k will create a third world communist nation devoid of capitalism. For fifty years prior to President Reagan, the top rates ranged from 70% to 94% and I don’t recall any disincentivizing of industry, or hysteric screaming about redistribution of wealth, although Joe McCarthy and his ilk were screaming about Godless Communism. Quite to the contrary, those were some of America’s most prosperous years, not only for the middle class, but also for those at the top. Please explain without saying the high marginal tax rates were overcome by lots of loopholes since the loopholes are still with us.
It’s only been since the Reagan through Bush II tax cuts for the wealthy along with the corresponding increase in national debt that almost all increases in productivity have rewarded the top few while middle class standards of living have stagnated. In the last decade, the middle class has lost 7%. Do you suppose “Starve the Beast” has anything to do with that?
Capital gains are taxed as corporate taxes, then as capital gains. It’s a double tax higher that income taxes.
“There is no reason that dividends or capital gains should actually be taxed at a lower rate than actual wages or bank interest”.
Actually, the very good reason that dividends are taxed at a lower rate than wages would be because dividends have already been taxed (at the highest corp tax rate on the planet), when the profits were initially earned. You may feel that double taxation is ok, but most Americans would call that unfair.
Rick, I disagree with you, and I am in that top tax bracket. My version of pursuit of happiness includes my neighbors having health care, secure retirement, a spot in the middle class, and food to eat. Ideally, we’d also bring down college tuition. This sense of entitlement that you have, where did it come from? Certainly not your conscience.
First time I have had anyone accuse me of having a sense of entitlement. I guess I do feel entitled to work hard, take personal responsbility for myself and my dependents financially, legally and morally. But I also expect other Americans to have the personal committments. Not all at the same level, you can make personal, lifestyle choices, but you have to accept the consequences of them.
If someone with no knowledge of our country or the current state of class warfare that exists read these blogs, he/she would probably recach the following conlcusions:
“Rich” people don’t pay any taxes or if they do, they pay at lower rates than “poor” people.
“Rich” people contribute nothing to social programs that benefit less fortunate people.
“Rich” people contribute nothing to the costs of education for our children.
“Rich” people make no charitable contributions.
“Poor” people pay 80% of the Federal Income tax while “Rich” people might pay 20%.
We know that everyone of those statements is wrong. But uniformed people would think that this is the state of affairs in the USA today. And sadly there were a whole lot of uniformed people who voted in the last election. Take some time and read some of the left leaning blogs here. Then you’ll have an understanding of why the dissemination of incorrect and/or skewed information has gotten us to this current state of disarray.
Your using a straw man argument Rick. El Rushbo does that all the time too. No one on this site has said those things, but you define the straw man as aggressive toward you, the victim, and then defend against the illogic of what no one said.
I believe that a foreigner reading this blog would conclude that many “rich” folk feel entitled to all they earn, feel no obligation to the country that provided them tremendous opportunity, and resentful when their taxes go toward helping those less fortunate.
Spend more time working, making yourself better, and not worrying about how much in taxes other pay. I bet you would be a happier person.
Thanks for your concern about my happiness Larry, but I assure you that my happiness and self esteem are just fine. I’m about as “good” and “happy” as I’m going to get.
I guess your message is that people like me shouldn’t concern ourselves with the tax system since that should be left to people like you. Right? And then, what exactly do you think “others” should pay in taxes?
@ spb – “Bring down college tuition” It’s fascinating how the laws of supply and demand are forgotten. Why is college tuition outrageously high? Because demand is artificially inflated by government intervention in the industry. Making university free for all would only make it insanely expensive to the tax payers.
The same goes for health care. We will see a dramatic drop in the quality of our health care system, combined with a continuous rapid growth in the cost of health care as a result of the mushrooming demand placed on the industry by our benevolent government.
You might indeed be well-intentioned. The problem is that your utopia doesn’t exist, and cannot exist, anywhere outside of academia.
The Affordable Care Act is curbing health care costs. So it is actually helping reduce “rapid growth in the cost of health care.” And it is doing that by increasing insurance market competition and tackling the underlying costs of medicare. Furthermore, the Congressional Budget Office says that it will save our government $100 billion in the first decade and over a trillion dollars in the next decade. I presume that you are against the Affordable Care Act though. If you want to reduce market competition for insurance companies and you want our government to spend billions to trillions more, then vote for Republicans who want to repeal the ACA.
How is government artificially inflating demand for health care? If you’re referring to our government encouraging screenings and getting preventive care, then that’s because economists have found that we actually save money by doing that. Doctors on the other hand love to pimp their pills for the drug companies. But I guess you would never want to slam our benevolent drug corporations for artificially inflating demand, would you?
Lastly, the market is responsible for increasing the demand for individuals with a college education. There has been a huge increase in the need for highly skilled workers as a result of growth in the IT sector of our economy. It is so hard to get a company to hire you that pays well without a college education, regardless if you are working for the government or not. Furthermore, if you want us to continue to be pioneers of some of the greatest technological advancements, then you have to support efforts that equip our citizens with quality higher education.
Are you seriously only concerned about our government though? It’s the corporations who are really in charge. Everyone knows that, lol.
TheGuy – Obamacare has done nothing related to reducing health care costs at this point because it won’t be fully implemented until 2014. It has helped to keep those nasty corporations from hiring since, unlike Obama’s vast federal empire, they have to know what it will cost them to hire an employee and whether or not the additional employment costs can be offset with enough revenues to maintain their profit margins. You see, TheGuy, that’s how things work outside of the Magic O’Kingdom – costs matter; you earn profits or you die.
Bring down college tuition? “Everyone” claims that college education is too expensive be it Ivy League or the New York State SUNY system, yet not a week goes by where I don’t read some article discussing how university professors are not paid very well. So, then, who is getting all the money at the colleges? Administrators and maintenance people?
no, the athletics departments.
spa, I agree with you one hundred percent. However, there is one area that I would like to address. I agree that your income group should only pay the same percentage of income tax as other earners so let’s make it 100 percent in every category. Pay 100 percent into social security. Why should a someone earning 50,000 per year pay on 100 percent of his wages while your husband pays on only about 25 percent of his …… assuming he is only earning 400,000 per year. He saves even more if he’s above that in earning power.
So, SS stops when you hit 110K in salary. Yes, if you make 400K, your SS stops once you hit 110K, but you are still maxed out on the amount of SS you will get. So someone making $120K will get the same amount of money someone making $400K will get. At some point, there will be a means test and the person making $400K might only get 75%. So that person will be penalized because the assumption will be they should have saved more money. But we all know people making $1,000,000 go bankrupt all the time. So really, it is a forced pension for people. Now, would you rather have a system where you put in 6.2% and you are guaranteed to get 5% return? I say, you get a lump sum back of what you put in when you hit 65 and then you can invest it, but the poor are mostly uneducated about investing so they will just take their fixed amount for the rest of their life. If you are making $25K, SS isn’t enough to live off of, but it was never meant to be your sole source of income. My SS will be a small part of my retirement income because we plan not to get any. SS is a progressive scale, the more you make, the more you get, but it is limited.
JB – SS is a highly progressive tax. On a relative basis, the more you pay into the system, the less you get out of it; the less you put into it, the more you take out. All of this is academic, of course, because the OASDI “trust” funds are nothing more than a collection of IOUs from the U.S. Treasury, guaranteed to be worth far less than the dollars borrowed by said Treasury to fund long forgotten annual budget deficits.
My wife and I are part of the 1% and with the recent tax increases have adjusted not only where our money is invested but will be stepping out of the workforce altogether in 5 years or less(we are in our 40’s) The high taxes are a disincentive for us to remain working and we know many other dual income 1 percenters that are planning to do the same. My time will be better spent coaching and volunteering at our church and other charitable organizations. Congress can figure out how to balance the budget without my $500k+ per year in taxes.
Be careful Tahoebum, I tried retiring in my 40’s but found there were no other kids my age to play with. About three years in, I gave up and went back to work for another twelve years. It’s the work that rewards, more than the money.
If you’re in the top 1% and you are only paying 500k in taxes, I think you are slime. You should be paying 99% tax on everything over 10mil. You top 1%er’s bitch about so much taxes but you fail to pay your employees decent wages, with few benefits and no hope of retirement. It is no wonder that the social security and medicare are costing so much. You take all and give nothing but the minimum. These big corporations take away medical benefits and retirement funds, and give that money to the CEO’s as bonuses because the dividends look good because of the saving they are making. What they don’t realize is that the medical problems still occur, the retirements still occur, but there is no money for the workers so they have no choice but reach out to the government to provide for them. The corporations of old provided full medical benefits and retirement funds to provide for the years of toil that the workers gave them. There is no company loyalty there are no reasons left for the worker to produce. You will come to realize that you may have it all but, you “didn’t” make that. The people you use and throw away are the ones that made it for you. I hope you get cancer and it eats up all of your money. Then you’ll know what life is really like!!!
The top 20% have 93% of the wealth in this country, and over 50% of all income. The top 1% have 40% of the wealth, and make 18% of all income.
So yes, by targeting those at the top, you can actually cover a significant portion of income, income more likely to become part of a fairly unproductive pile of money (Buying stock is not terribly stimulative – just increases stock prices for the next guy. Buy stuff, on the other hand…)
Yes Goat, you are right.
The issue with your assertion that a progressive tax is “potentially fatal” is the lack of data to support it. In the 1950’s, we had huge marginal tax rates and boomed just fine, thank you. I’m not suggesting that there’s a cause and effect relationship, and that we should go back to those rates, but when you imply that there would be an economic “death” over this isn’t borne out by the data.
And what do you plan to do when your “not going to take it anymore”?
Once the world’s’ population is fully informed that 90% of the worlds currency is owned and circulated by our small handful of rich, who exactly will be “mad as hell and not going to take it anymore”?
Don’t kid yourself.
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