Obama Plans to Reduce Budget Deficit to $533 Billion by 2013

[Texarkandy]

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.

 

[samclem]

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.

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!

 

[dex]

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.

 

[samclem]

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.

 

[ERD50]

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.

-ERD50

 

[dex]

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.

 

[kumquat]

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?

 

[ERD50]

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.


-ERD50

 

[samclem]

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.

 

[laurence]

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.

 

[ziggy29]

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.

 

[cashbalancetrouble]

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

 

[FUEGO]

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).

 

[dex]

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/forums/f50/lose-your-house-lose-your-vote-38639.html
See post 17 Similar issue.

 

[TromboneAl]

Originally Posted by Letj
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.

 

[Westernskies]

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.

It is ludicrous for someone to say that just because they would be willing to pay more taxes that I should, too. Anyone who feels they are not paying enough in taxes can make a voluntary contribution to the US Treasury toward reducing the national debt. Heck, why not just buy savings bonds and throw them away if you truly feel that way?

 

[ziggy29]

It is ludicrous for someone to say that just because they would be willing to pay more taxes that I should, too. Anyone who feels thay are not paying enough in taxes can make a voluntary contribution to the US Treasury toward reducing the national debt. Heck, why not just buy savings bonds and throw them away if you truly feel that way?

Tragedy of the commons.

One person may not feel like they can make a difference by giving more money to the Treasury -- so they won't do it as an individual. But if they can be assured that many millions of others in the same financial situation would have to do the same, they'd be willing to do it.

 

[Westernskies]

Tragedy of the commons.

One person may not feel like they can make a difference by giving more money to the Treasury -- so they won't do it as an individual. But if they can be assured that many millions of others in the same financial situation would have to do the same, they'd be willing to do it.

But they say that "charity begins at home....."

 

[ERD50]

Tragedy of the commons.

One person may not feel like they can make a difference by giving more money to the Treasury -- so they won't do it as an individual. But if they can be assured that many millions of others in the same financial situation would have to do the same, they'd be willing to do it.

It would be easier for me to accept that if I saw some action behind it, something that would prove they are serious.

How come I don't see any blogs or organizations that are trying to raise money for the government? I envision one of those thermometers with a goal on it. "Raise $X Trillion by the end of the year! If you think taxes should be higher, contribute here and show the world that you are willing to put your money where your mouth is! We can do this, if we all just work together!"

I don't see any of those.

But other orgs do things like this, for stuff they believe in. I believe in conservation, and there are many sites I can go to for tips on how to lower my utility and gas bill. People donate to charities they believe in, the Red Cross, American Cancer Society, etc. When I donate the Heifer.org each year, I don't think " Hey, why am I doing this - not everybody does it, so what difference can I make?". No, I do it because I believe in it. Every dollar I contribute is another dollar that helps them, whether you chose to contribute or not. So why don't these people donate money to a cause they believe in?

Sorry, strikes me as disingenuous, to the point of hypocrisy.

-ERD50

 

[FinanceDude]

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.

Welcome to Wisconsin.......this has been the plan our state govt has been running for 40 years.......

 

[ziggy29]

Sorry, strikes me as disingenuous, to the point of hypocrisy.

I'm not defending the mentality -- just explaining it as I see it.

I would agree that I'd like to see some leadership by example amongst those who are the loudest about "sacrificing" more and "giving back more". Put your money where your mouths are and I might be more inclined to follow.

 

[FinanceDude]

Feb. 21 (Bloomberg) -- President Barack Obama plans to cut the U.S. budget deficit to $533 billion by the end of his first term by increasing taxes on the wealthy and cutting spending for the war in Iraq, according to an administration official.

Interesting........

 

[hankster]

It would be easier for me to accept that if I saw some action behind it, something that would prove they are serious.

How come I don't see any blogs or organizations that are trying to raise money for the government? I envision one of those thermometers with a goal on it. "Raise $X Trillion by the end of the year! If you think taxes should be higher, contribute here and show the world that you are willing to put your money where your mouth is! We can do this, if we all just work together!"

I don't see any of those.

But other orgs do things like this, for stuff they believe in. I believe in conservation, and there are many sites I can go to for tips on how to lower my utility and gas bill. People donate to charities they believe in, the Red Cross, American Cancer Society, etc. When I donate the Heifer.org each year, I don't think " Hey, why am I doing this - not everybody does it, so what difference can I make?". No, I do it because I believe in it. Every dollar I contribute is another dollar that helps them, whether you chose to contribute or not. So why don't these people donate money to a cause they believe in?

Sorry, strikes me as disingenuous, to the point of hypocrisy.

-ERD50

I believe we don't see any of those because people need to feel in their heart of hearts that their dollars are making a difference. If I give to the Red Cross, I can see a disaster-stricken family getting needed medical care because I gave. I can see a donation to the Salvation Army helping someone who is homeless have a safe place to sleep for the night.

It's hard to imagine giving to a black hole of questionable bailouts and poorly managed programs. Or worse yet, a pork barrel project in Congressman Dodo's district (even if that district is mine)

 

[ERD50]

I'm not defending the mentality -- just explaining it as I see it.

I would agree that I'd like to see some leadership by example amongst those who are the loudest about "sacrificing" more and "giving back more". Put your money where your mouths are and I might be more inclined to follow.

We are in agreement on that front then.

I believe we don't see any of those because people need to feel in their heart of hearts that their dollars are making a difference. If I give to the Red Cross, I can see a disaster-stricken family getting needed medical care because I gave. I can see a donation to the Salvation Army helping someone who is homeless have a safe place to sleep for the night.

It's hard to imagine giving to a black hole of questionable bailouts and poorly managed programs. Or worse yet, a pork barrel project in Congressman Dodo's district (even if that district is mine)

Yes, I thought about that aspect right after I posted. Which makes me think, maybe the govt should just do more to encourage charitable donations? Like maybe up to half your tax bill as a *credit* against taxes, rather than a deduction. The charities are going to spend it (stimulate the economy), and most seem to think more efficiently than the govt (or the govt would be our favorite "charity" that we voluntarily give to).

IIRC, they are changing it so you don't have to itemize to deduct charity contributions. If we are going to mess with that at all, I think that should be done.

-ERD50

 

[SkisALot]

I for one would not mind paying more.


You can write a check to the U.S. Treasury any time you want to for however much more you want to pay. So if you don't mind paying more, then do it.