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Old 02-27-2011, 12:30 AM   #241
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I actually agree with Greg, but I'd extended it to lets tax the middle class cause the problem is there aren't enough rich people.
There aren't enough people to tax period. There are however ever expanding lists of things needing government finance and ways to tax people, and efforts to try to get those same people to invest and donate less so more can be taxed. I find this particularly damming:

http://www.taxpolicycenter.org/taxto...nal-020210.pdf
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The tax treatment of itemized deductions reduces the after-tax cost of allowed expenditures. For example, a taxpayer in the 35 percent bracket who donates to a charity effectively pays only 65 cents for each dollar she gives because giving a dollar reduces her tax bill by 35 cents (35 per-cent of the deductible one-dollar donation). That lower after-tax price of giving provides the tax-payer with an incentive to give more to charitable causes than she would in the absence of the de-duction and consequent tax savings. The same outcome obtains for other itemizable spending; for example, people may buy more or better housing because the deductibility of mortgage interest and property taxes reduces their after-tax costs. Limiting the value of deductions to 28 percent would increase the after-tax cost of charitable giving and other itemizable expenses for high-income taxpayers and would therefore reduce the amount of those activities.
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Old 02-27-2011, 08:32 AM   #242
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Originally Posted by kombat View Post
It seems that, as I suspected, nobody can offer a rational, moral justification for an estate tax. The best anyone seems to be able to offer is, "they're dead so they won't miss it, and it's not fair that their hiers get to inherit money, because I don't have any rich relatives."

...


The estate tax, income tax, cap gains tax... all taxes are heavily debated and riddled with political hyperbole for but one reason; Some group of people hope to gain advantage by having the tax burden shifted to another group. Yes it is that simple!


Anyone can make an impassioned argument as to why taxes are unfair or an excessive burden and find some reason that makes it correct.

But (aside from curbing excess govt spending) the taxes have to be paid to run the republic and pay our legal debts.


The truly wealthy of this country avoided paying some of their tax burden during the last 30 years because of several income and cap gains tax cuts that favored them (note most people have their nest egg in a tax deferred retirement account with income tax due)... But the govt borrowed from the SS trust to continue spending (even though they cut the rich a very generous tax break). The tax bill is coming due. That money borrowed from our SS has to be paid back.

So the burden will be foisted on the current generation with higher income taxes... the previous generation of rich people (as they die) will have to pay their back taxes in the form of a higher estate tax. They got to enjoy it while they were alive! They have not been dealt an unfair hand.... the middle class is the group that is getting the shaft.
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Old 02-27-2011, 10:00 AM   #243
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Now don't go and change the definition of 'rich'. For most people it means those with more money than they have. With your definition, we may have to tax GregLee, and I don't think he's gonna like that!
No, I do not have more money than I have, either.
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Old 02-27-2011, 10:51 AM   #244
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No, I do not have more money than I have, either.
IRS: It doesn't matter how much you have; just send it in.
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Old 02-27-2011, 05:15 PM   #245
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There are several people here who have repeatedly suggested taxing the rich is the solution, without considering the $, with no specifics and without offering any other answers. I can only assume they think that's all it will take - that's absurb when you look at the numbers. I was hoping they might look at the relative numbers and realize how absurd their positions are.
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If you took 100% from everyone in the top bracket it would hardly make a dent in the deficit.
Like I said, I'm not one of the people suggesting that we should close the whole deficit by taxing the rich. But when I look at the numbers, it doesn't seem so absurd to me.

In 2005, the top 1% averaged $1.07 million after all federal taxes.
Multiplying by 1.13 million families in the top 1%, I get $1.2 trillion in after federal tax income.
If that number grows as fast as the projected (nominal) GDP between 2005 and 2015, it will be $1.8 trillion.
The projected budget deficit for 2015 is $606 billion.

It looks like it would take about 1/3 of the after federal tax income to cover that deficit.

Again, I wouldn't recommend that. But I would say that we could cover about a third of the deficit by increasing the average FIT rate on the top 1% from 19% to about 27%. And, we could do that without increasing the 35% top marginal rate on labor. We would go back to days when dividends and capital gains are taxed at about the same rates as labor income.
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Old 02-27-2011, 05:31 PM   #246
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Didn't they say if they pushed the marginal rates back up to 38% for incomes over $250k, over 10 years, the additional tax revenue would have closed most of the gap.

But that's before Obama agreed to extend the Bush tax cuts for another 2 years. Before the Bush tax cuts, the fiscal situation was much better, wasn't it?
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Old 02-27-2011, 07:20 PM   #247
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Didn't they say if they pushed the marginal rates back up to 38% for incomes over $250k, over 10 years, the additional tax revenue would have closed most of the gap.

But that's before Obama agreed to extend the Bush tax cuts for another 2 years. Before the Bush tax cuts, the fiscal situation was much better, wasn't it?
Not even close, that was the central point of this thread, aimed at those who offer nothing else as a solution. Whether we "tax the rich" more or not (call it top 20% or whatever), it's going to take much more than that with current revenues & spending. Of course I don't expect unemployment to remain at 9%+ forever, which will close the gap noticeably, but full employment (6%+) may still be a long way off...meanwhile the national debt grows by leaps and bounds.
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Old 02-27-2011, 08:32 PM   #248
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Here is a source on the budgetary impact of keeping the tax rates of the Bush years:

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Budgetary impact of the 2001 and 2003 tax cuts
Main article: Bush tax cuts


Congressional Research Service-Impact of Extension of the Bush Tax Cuts
A variety of tax cuts were enacted under President Bush between 2001–2003 (commonly referred to as the "Bush tax cuts"), through the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). Most of these tax cuts were scheduled to expire December 31, 2010. Since CBO projections are based on current law, the projections discussed above assume these tax cuts will expire, which may prove politically challenging.
In August 2010, CBO estimated that extending the tax cuts for the 2011-2020 time period would add $3.3 trillion to the national debt: $2.65 trillion in foregone tax revenue plus another $0.66 trillion for interest and debt service costs.[52]
The non-partisan Pew Charitable Trusts estimated in May 2010 that extending some or all of the Bush tax cuts would have the following impact under these scenarios:
Making the tax cuts permanent for all taxpayers, regardless of income, would increase the national debt $3.1 trillion over the next 10 years.
Limiting the extension to individuals making less than $200,000 and married couples earning less than $250,000 would increase the debt about $2.3 trillion in the next decade.
Extending the tax cuts for all taxpayers for only two years would cost $558 billion over the next 10 years.[53]
The non-partisan Congressional Research Service (CRS) has reported the 10-year revenue loss from extending the 2001 and 2003 tax cuts beyond 2010 at $2.9 trillion, with an additional $606 billion in debt service costs (interest), for a combined total of $3.5 trillion. CRS cited CBO estimates that extending the cuts permanently, including the repeal of the estate tax, would add 2% of GDP to the annual deficit.[54]
United States federal budget - Wikipedia, the free encyclopedia

Wiki page has links to the original sources.
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Old 02-27-2011, 10:31 PM   #249
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Like I said, I'm not one of the people suggesting that we should close the whole deficit by taxing the rich. But when I look at the numbers, it doesn't seem so absurd to me.

In 2005, the top 1% averaged $1.07 million after all federal taxes.
Multiplying by 1.13 million families in the top 1%, I get $1.2 trillion in after federal tax income.
If that number grows as fast as the projected (nominal) GDP between 2005 and 2015, it will be $1.8 trillion.
If these people have the sense that I think they have they will not hang around to be milked. Singapore beckons, as do Switzerland and number of other places that have a lot over the US.

Ha
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Old 02-27-2011, 10:52 PM   #250
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If these people have the sense that I think they have they will not hang around to be milked. Singapore beckons, as do Switzerland and number of other places that have a lot over the US.

Ha
I don't know about Singapore but would Switzerland have lower tax rates?

Cost of living is really high, even before the Swiss Franc hit historic highs against the dollar. I visited there 4 years ago and it was crazy expensive back then.

There are certainly enough tax havens, like Monaco, but you have to renounce your citizenship right? As long as you're US citizen, doesn't matter where you live. Even if you make most of your income overseas, after a certain amount, you still owe Uncle Sam.

Now, would wealthy Americans have same opportunities to generate income in these other countries (putting aside the cost of living in nice developed countries)? Monaco is a beautiful playground if you're rich, but unless you're selling yachts, there's not much infrastructure for many types of business. Won't be as easy to found a high-tech startup there, for instance.
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Old 02-27-2011, 11:21 PM   #251
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Originally Posted by Independent View Post

In 2005, the top 1% averaged $1.07 million after all federal taxes.
Multiplying by 1.13 million families in the top 1%, I get $1.2 trillion in after federal tax income.

If that number grows as fast as the projected (nominal) GDP between 2005 and 2015, it will be $1.8 trillion.
The projected budget deficit for 2015 is $606 billion.

It looks like it would take about 1/3 of the after federal tax income to cover that deficit.

Again, I wouldn't recommend that. But I would say that we could cover about a third of the deficit by increasing the average FIT rate on the top 1% from 19% to about 27%.
So you say raising the avg rates on the top 1% from 19% to 27% could (statically modeled) collect about 1/3 (29% by my calcs) of that deficit. Where does the other 67%-71% come from?

-ERD50
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Old 02-27-2011, 11:32 PM   #252
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So you say raising the avg rates on the top 1% from 19% to 27% could (statically modeled) collect about 1/3 (29% by my calcs) of that deficit. Where does the other 67%-71% come from?

-ERD50
The traditional sources of magically creating money.

Eliminating government waste and fraud, getting rid of corporate tax loopholes and corporate welfare, cutting defense, and plus the ever popular new Green economy.

I am sure I missed a few.
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Old 02-27-2011, 11:42 PM   #253
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I don't know about Singapore but would Switzerland have lower tax rates?

Cost of living is really high, even before the Swiss Franc hit historic highs against the dollar. I visited there 4 years ago and it was crazy expensive back then.

There are certainly enough tax havens, like Monaco, but you have to renounce your citizenship right? As long as you're US citizen, doesn't matter where you live. Even if you make most of your income overseas, after a certain amount, you still owe Uncle Sam.

Now, would wealthy Americans have same opportunities to generate income in these other countries (putting aside the cost of living in nice developed countries)? Monaco is a beautiful playground if you're rich, but unless you're selling yachts, there's not much infrastructure for many types of business. Won't be as easy to found a high-tech startup there, for instance.
well said. all these concerns about the wealthy leaving the USA because of higher taxes are just not well thought out. they wont leave, and even if they did they would still owe the tax. they wont renounce their US citizenship.
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Old 02-28-2011, 07:15 AM   #254
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To me this is just different. Let me first say that I will be upfront and say that I would prefer to have better services and higher taxes. I am OK with taxes being increased. I do think there is unnecessary spending in the budget but by and large would prefer to raise taxes than do draconian cuts to services I think are needed.

But, I have just never thought the inheritance tax was fair. The money was already taxed and I just don't think there should be tax on leaving your money to others.
Have you ever sent the IRS more money than you owe? Choose not to take large deductions you can take? Put your money where your mouth is and voluntarily increase your own taxes. I wonder how much the government would raise if all the people I've seen who say they were ok with higher taxes stepped up to the plate and actually did it?
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Old 02-28-2011, 07:21 AM   #255
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are you so sure? maybe people making that much money arent working for the money anymore, maybe they are working because they love to work or love the power.
How do you know this? How much is too much? Maybe they enjoy an expensive yacht, huge home and private plane as much as you enjoy things you can afford which others with lower incomes cannot afford.
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Old 02-28-2011, 09:19 AM   #256
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So you say raising the avg rates on the top 1% from 19% to 27% could (statically modeled) collect about 1/3 (29% by my calcs) of that deficit. Where does the other 67%-71% come from?

-ERD50
The $61 billion spending cuts the R's have proposed for the remainder of FY2011 seems like a good start in "discretionary, non-defense". Though I think cutting the IRS budget is shooting yourself in the foot unless we simplify taxes.

Then it's medical costs. I believe we've talked about that one before. That's the elephant in the federal budget.

Long term (after 2015) we need to adjust SS. I'm sure we should raise the retirement age, after that any combination of benefit cuts and tax increases work for me.

(I got the 1/3 this way: 1.13 million taxpayers averaging $1.56 million of before tax income in 2005, grossed up by 51% to reflect increase in GDP from 2005 to 2015, divided by $606 billion.)
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Old 02-28-2011, 09:35 AM   #257
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If these people have the sense that I think they have they will not hang around to be milked. Singapore beckons, as do Switzerland and number of other places that have a lot over the US.

Ha
We've had much higher tax rates on dividends and capital gains in the recent past. In fact, dividends had always been taxed at the same rates as ordinary income up to 2002. The top capital gains rate was 25% or more for 50 of the 55 years from 1945-1999.

These 15% rates for capital income are a recent change to tax policy.

I don't recall any flood of rich people renouncing citizenship and moving all their assets overseas in those many years of higher rates.
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Old 02-28-2011, 09:49 AM   #258
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Where does the other 67%-71% come from?-ERD50
Stimulus money?
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Old 02-28-2011, 10:03 AM   #259
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Like I said, I'm not one of the people suggesting that we should close the whole deficit by taxing the rich. But when I look at the numbers, it doesn't seem so absurd to me.

In 2005, the top 1% averaged $1.07 million after all federal taxes.
Multiplying by 1.13 million families in the top 1%, I get $1.2 trillion in after federal tax income.
If that number grows as fast as the projected (nominal) GDP between 2005 and 2015, it will be $1.8 trillion.
The projected budget deficit for 2015 is $606 billion.

It looks like it would take about 1/3 of the after federal tax income to cover that deficit.

Again, I wouldn't recommend that. But I would say that we could cover about a third of the deficit by increasing the average FIT rate on the top 1% from 19% to about 27%. And, we could do that without increasing the 35% top marginal rate on labor. We would go back to days when dividends and capital gains are taxed at about the same rates as labor income.

One of the problems with a high cap gain tax is that it can be avoided... and when the rate is very high it is avoided...

You do NOT have to sell cap assets if you do not what to....

Believe me... I did a number of proformas for rich people back in the early 80s on how much a sale of something would cost them... almost all the time they decided to not sell...

So, raising the cap gain tax will not bring in much, if any, new revenue...
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Old 02-28-2011, 10:08 AM   #260
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We've had much higher tax rates on dividends and capital gains in the recent past. In fact, dividends had always been taxed at the same rates as ordinary income up to 2002. The top capital gains rate was 25% or more for 50 of the 55 years from 1945-1999.

These 15% rates for capital income are a recent change to tax policy.

I don't recall any flood of rich people renouncing citizenship and moving all their assets overseas in those many years of higher rates.

Some people seem to forget that even with the high tax rate here... it is usually much worse in other major countries... remember the song "The Taxman" by the Beatle's IIRC, it was 1 for you, 19 for me... or a 95% marginal tax rate....
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