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Old 02-22-2009, 11:52 AM   #21
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When working at a software company, and I wasn't in management, I often thought some decisions were stupid. When I was in management, I saw that there was a lot more information involved, and the decisions weren't as stupid as they seemed from the outside.

You may not agree with the decisions being made, but believing they are made due to a lack of basic economic information is probably wrong.

In announcing the White House Economic Recovery Advisory Board...
The board will be chaired by former Federal Reserve chairman Paul A. Volcker. Its members include Jeffrey R. Immelt, chief executive of General Electric, and James Owens, chief executive of Caterpillar. Both companies have strong sales around the world, though both are encountering hard times amid the slowing global economy; Caterpillar said last month it would cut 20,000 jobs.


The board also includes representatives of labor organizations: Anna Burger, who chairs the labor group Change to Win, and Richard L. Trumka, secretary-treasurer of the AFL-CIO. There are also two prominent conservatives: William H. Donaldson, who served as chairman of the Securities and Exchange Commission during the Bush administration, and Reagan administration economic adviser Martin Feldstein, who has supported the idea of a massive economic stimulus package but was sharply critical of the legislation passed by the House of Representatives.
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Old 02-22-2009, 11:55 AM   #22
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But where does the federal money come from? It was taken from individuals and businesses of that state in the form of taxes.

So if a state gets $2 billion in federal aid but its entities paid $5 billion in taxes for those aid programs, that state is getting screwed.
. . . in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish . . .

So it's just not about the state where the federal government is doing business, but about all of the states. If we could balance the costs of federal government spending based on the taxation in a given state, then we would have the confederation of states as established in 1776, under the articles of confederation. That didn't work out so well, so in 1787, we established this form of government.

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Old 02-22-2009, 12:15 PM   #23
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... When I was in management, I saw that there was a lot more information involved, and the decisions weren't as stupid as they seemed from the outside.

You may not agree with the decisions being made, but believing they are made due to a lack of basic economic information is probably wrong.
I hear ya, but there is another way to look at it.

It may not be that the decisions are being made with a lack of knowledge. It may be the decisions are being made in spite of that knowledge, for political expediency.

That CAT CEO told Obama to drop the "Buy American" provisions, stating they would do more harm than good. I think Obama should listen to an American Mfg and exporter about that.

What I suspect is, that they feel their target audience responds to "Buy American" sound bites, and "tax business", and those people don't peel back a single layer of the onion to understand what that really means. Fewer jobs, higher prices, deepening recession. It appears to be a simple matter of "tell them what they want to hear", or some might say "politics as usual".

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Old 02-22-2009, 02:24 PM   #24
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It appears to be a simple matter of "tell them what they want to hear", or some might say "politics as usual".

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This is truly shocking to me. After all, Obama hails from the motherlode of statesmanship and selfless governing, Illinois.

Are you certain that this is true?

Ha
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Old 02-22-2009, 04:03 PM   #25
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He plans to lower the budget deficit by taxing hedge fund managers more heavily

It's hard to overstimate the gullibility of an American, but this is really pushing it.

Ha
The deficit has to be cured somehow and the government can only do that by either increasing taxes or cutting spending. What's wrong with asking the rich to pay some more. Every advance democracy around the world does this and I for one would not mind paying more. My federal tax rate is 10% and it's this low because I have a lot of passive income. The fact is that while wealthy people pay most of the taxes in this country, their effective tax rate is less than the average middle class individual because they have a lot of income producing assets and the tax code heavily favor them. It's a shame!
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Old 02-22-2009, 04:15 PM   #26
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He is reducing the deficit by cutting taxes?
Perhaps it's a misprint. Maybe what he actually said is that he is going to reduce the deficit by cutting taxes Texas.

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Old 02-22-2009, 07:32 PM   #27
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I for one would not mind paying more.
Well, then DO! If you think you should pay more, then just pay more. To do otherwise is hypocritical.

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The fact is that while wealthy people pay most of the taxes in this country, their effective tax rate is less than the average middle class individual because they have a lot of income producing assets and the tax code heavily favor them.
"Income producing assets?" What do you mean, specifically?

For tax year 2006:
The top 5% of income earners had an average income tax rate of 20.68%
The top 25% of income earners had an average income tax rate of 15.95%
The top 26-50% of income earners had an average tax rate of 7.01%
The bottom 50% of income earners had an average income tax rate of 3.01%

This, of course, does not include payroll taxes (Medicare and SS). But, these taxes are also highly "progressive" in that high income earners get back a tiny percentage of what they pay in compared to lower income persons.

Yep, those hated rich folks are paying practically nothing!
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Old 02-22-2009, 07:46 PM   #28
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Well, then DO! If you think you should pay more, then just pay more. To do otherwise is hypocritical.

"Income producing assets?" What do you mean, specifically?
For tax year 2006:
The top 5% of income earners had an average income tax rate of 20.68%
The top 25% of income earners had an average income tax rate of 15.95%
The top 26-50% of income earners had an average tax rate of 7.01%
The bottom 50% of income earners had an average income tax rate of 3.01%

This, of course, does not include payroll taxes (Medicare and SS). But, these taxes are also highly "progressive" in that high income earners get back a tiny percentage of what they pay in compared to lower income persons.

Yep, those hated rich folks are paying practically nothing!
I'm not sure what your point is but 153K isn't a lot of money these days - especially with a family.

Including all tax returns that had a positive AGI, taxpayers with an AGI of $153,542 or more in 2006 constituted the nation's top 5 percent of earners.

The issue isn't about taxing the rich. It is that the tax system is broken and talking about taxing the rich is just a distraction.

Have you ever wondered how much money the new taxes on the rich will bring in? I do. But it isn't mentioned. Why?

Michael Bloomberg on Raising Taxes: What Would Santelli Think? - Capital Commerce (usnews.com)
One percent of the people that live in the city, the households that file in the city pay something like 50% of the taxes.
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Old 02-22-2009, 08:00 PM   #29
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I'm not sure what your point is but 153K isn't a lot of money these days - especially with a family.
I was responding to Letj, who claimed that those with higher incomes pay a lower effective tax rate than those at approx the median income level. I do not believe that is true, and statistics show it is not true.
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Old 02-22-2009, 09:14 PM   #30
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The deficit has to be cured somehow and the government can only do that by either increasing taxes or cutting spending.
But the govt is also telling us they are acting to spur the economy.

Cutting spending will cut the deficit - I agree with that.

Increasing taxes - a little more questionable. There is evidence that lowering tax rates spurs the economy which results in greater tax collections. I'm sure it's arguable, it is tough to prove these things as you can't just run an experiment in a lab.

But, increasing taxes will slow the economy, there is plenty of basis for that. So these goals seem to be at odds with themselves.

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Old 02-22-2009, 09:41 PM   #31
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I was responding to Letj, who claimed that those with higher incomes pay a lower effective tax rate than those at approx the median income level. I do not believe that is true, and statistics show it is not true.
Sorry about that. I read what was posted in you post and I didn't understand.
I guess I thought it was obvious that with a progressive tax rate and the elimination of certain tax deductions - the more you make the more you pay.

Ultimately, I think this idea of taxing the "Rich" is a distraction from the real problems.
I hope the GAO will compute how much additional tax income will come in due to the higher rates per year.
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Old 02-22-2009, 10:49 PM   #32
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For tax year 2006:
The top 5% of income earners had an average income tax rate of 20.68%
The top 25% of income earners had an average income tax rate of 15.95%
The top 26-50% of income earners had an average tax rate of 7.01%
The bottom 50% of income earners had an average income tax rate of 3.01%
What are your top marginal rates? Here in Canukistan, they approach 50%. A few year's ago they exceeded 50% (at least in my province). Last year my average was about 40%. What are you guys whining about?
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Old 02-22-2009, 11:01 PM   #33
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What are your top marginal rates? Here in Canukistan, they approach 50%. A few year's ago they exceeded 50% (at least in my province). Last year my average was about 40%. What are you guys whining about?
It's tough to say. I've commented on this before, but with all the complexities in the US tax code, it's hard to say what *anyone* pays. Yes, there are tables for marginal rates, but that does not tell the story.

2008 tax rates
$0 10%
$16,050 15%
$65,100 25%
$131,450 28%
$200,300 33%
$357,700 35%

Yet, while I had ~ $85K in "Adjusted Gross Income", after deductions I was in a 15% marginal tax bracket, but paid $25 in taxes for an effective rate of 0.03%. Bunch of credits kick in for me. Crazy.

I'm certainly not complaining about the amount of fed taxes I pay. But I complain loudly about the crazy methods they go about to calculate it. I should be paying far more, and I have.

Yet, you will hear people say "I am in the XX% tax bracket", as if it really meant something.

Oh yeah. Throw in FICA (SS), medicare, state tax, sales tax, utility taxes, property taxes, gas taxes, corporate taxes in the price of the goods we buy. No one knows.


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Old 02-22-2009, 11:13 PM   #34
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What are your top marginal rates?
In round numbers:
Top marginal rate (starts at $372,950) is 35%

But we also have Social Security and Medicare taxes ("Payroll taxes):
Social Security: 12.6% on the first $106,800 (Officially the wage earner pays 6.2% and the employer "pays" 6.2%, but since the total cost is a cost of employment, it is fair to say the entire thing comes as a reduction in the wages that would otherwise be paid)
Medicare: 2.9% on every dime of earmned income. Again, this is officially split between the employer and employee, but in fact the whole thing is a reduction from what the employee would have been paid).

The numbers I gave before were just for income taxes, did not inclde the payroll taxes.

Now, add in state taxes (very progressive in some states, other states have no income taxes and tax property or retail sales instead) and municipal taxes and we're starting to talk about real money at the upper end of the scale.
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Old 02-23-2009, 12:39 AM   #35
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I'm not sure what your point is but 153K isn't a lot of money these days - especially with a family.

Including all tax returns that had a positive AGI, taxpayers with an AGI of $153,542 or more in 2006 constituted the nation's top 5 percent of earners.

The issue isn't about taxing the rich. It is that the tax system is broken and talking about taxing the rich is just a distraction.

Have you ever wondered how much money the new taxes on the rich will bring in? I do. But it isn't mentioned. Why?

Michael Bloomberg on Raising Taxes: What Would Santelli Think? - Capital Commerce (usnews.com)
One percent of the people that live in the city, the households that file in the city pay something like 50% of the taxes.
The top 5 percent started at $153k? Wow, I figured it would be higher than that. DW and I surpassed that last year and will be significantly higher this year, something like 190k. I thought the top 5% was 250k according to the November campaign...

The thing that blows my mind, is even with the housing bubble bursting, we can't afford to live in an "upscale neighborhood in San Diego. Solid middle class? Yes, but no great shakes. Our friends are both doctors and they have a house of size and location that we would like, but it's not a mansion. It's totally out of reach for us (about 900k at this point). There are so many neighborhoods where thousands of homes sell for this and more here in San Diego. You would need 300k annual income to not be insane buying it. And San Diego doesn't compare to San Fran or NY.

That brings up another interesting point, I guess city folk are subsidizing country folk since the Fed tax system doesn't take cost of living into account.
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Old 02-23-2009, 07:44 AM   #36
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That brings up another interesting point, I guess city folk are subsidizing country folk since the Fed tax system doesn't take cost of living into account.
To a degree, but that's offset by the income tax deduction for property taxes.

But yes, where I live a $100,000 income is pretty darned comfortable, whereas in SF or NY it's really not all that much.
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Old 02-23-2009, 08:32 AM   #37
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Here is a link to a document showing how each state fairs in federal taxes sent and rec'd back. I didn't look at many but OHIO has given more when a DEM is in power and got more back when a REP is in White House. Interesting concept. Looks bad for us again.


The Tax Foundation - Federal Taxes Paid vs. Federal Spending Received by State, 1981-2005
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Old 02-23-2009, 10:02 AM   #38
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What are your top marginal rates? Here in Canukistan, they approach 50%. A few year's ago they exceeded 50% (at least in my province). Last year my average was about 40%. What are you guys whining about?
If you are in a high tax state, then you are talking 45%+ marginal tax rates. For an average working person with a middle income salary in a high tax state, you may be paying over 40% (25% fed, 7.65% payroll taxes which mostly cap out slightly over USD 100k, plus 8-9+% state/local income tax).
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Old 02-23-2009, 10:34 AM   #39
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Here is a link to a document showing how each state fairs in federal taxes sent and rec'd back. I didn't look at many but OHIO has given more when a DEM is in power and got more back when a REP is in White House. Interesting concept. Looks bad for us again.


The Tax Foundation - Federal Taxes Paid vs. Federal Spending Received by State, 1981-2005
http://www.early-retirement.org/foru...ote-38639.html
See post 17 Similar issue.
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Old 02-23-2009, 10:58 AM   #40
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I for one would not mind paying more.



Well, then DO! If you think you should pay more, then just pay more. To do otherwise is hypocritical.
To be fair, Letj probably realizes that one person sending in a big check isn't going to make any difference. She probably means that she'd be willing to pay more if all the richer people had to, and it would make a difference. So it's not hypocritical to say that you'd be willing to pay more taxes, yet not pay more individually.
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