Tax Cuts Extended to All Americans

[haha]

This clearly is a political thing, and opinion falls along political lines as should be expected. But I have several close friends, in their early 40s who as singles, not counting any investment income, have earned income of $750,000 to $1mm every year.

My point is really that "don't tax me, don't tax thee, tax the man behind the tree" is an morally and economically debilitating policy.

If we need more taxes, and we likely do, pass VAT legislation and be sure that consumption is taxed, rather than even more heavily the income of the nation's most productive people. I am an old divorced man with modest assets- a VAT will hit me directly. But it will be better for the country, and its people's moral stature.

In these debates some people seem to forget that high earners already pay an overwhelming proportion of the income taxes paid in our fair land.

Ha

[Westernskies]

Quote:

Originally Posted by MichaelB I'd love to see some evidence to support that claim.

Dear old Dad said it best 40+ years ago when I was young and impressionable; we were discussing the rich vs. poor paradigm.

"A poor man never gave me a job or a paycheck, son"

[HFWR]

Class warfare aside, the payroll tax holiday is so two years ago.

Which is when it should have been done...

I don't see any way out of our fiscal mess without more revenue. Some may come from increased economic activity, the rest from "enhanced collections".

Some are willing to tax others pay more, some would agree to it begrudgingly, if the spending side of the equation was also addressed. (Count me firmly in the second camp.)


Some are like Wesley Snipes...

[FreqFlyer]

I just don't see how we can cut taxes with money we don't have. Aren't we already spending 30% more than we're taking in at this point?

To me it's a zero sum game. Borrowing today to give tax breaks just means pain in the future when we have to pay it back.

Our politicians are the debt-equivalent of drug pushers.

1) Running a budget surplus - great, let's have tax cuts
2) Fighting two wars - wrong time to balance the budget
3) Economic recession - wrong time to balance the budget

We'll balance the budget when the bond market forces our hand, not due to any leadership or courage of the political class. My opinion at least.

[jdw_fire]

Quote:

Originally Posted by Gone4Good You're wasting your breath. We've had similar conversations here before. The median household income in the U.S. is $50,221 but somehow making 5 times the median never qualifies as "rich" on these boards (and as pointed out above, you probably need to make six or seven times the median to have taxable income of $250k once all of the breaks are figured in). I suspect the disconnect is because this is a well-to-do lot that sees themselves as "middle-class" even when they aren't.

if i am reading what you are saying i agree. incomes greater than $200k for a single and $250K for a couple are very affluent (rich) and should be taxed at a higher rate.

Quote:

Originally Posted by haha This clearly is a political thing, and opinion falls along political lines as should be expected. But I have several close friends, in their early 40s who as singles, not counting any investment income, have earned income of $750,000 to $1mm every year. My point is really that "don't tax me, don't tax thee, tax the man behind the tree" is an morally and economically debilitating policy.

actually we need to tax them even more, create an even higher tax bracket at $500k and $1M

Quote:

Originally Posted by haha If we need more taxes, and we likely do, pass VAT legislation and be sure that consumption is taxed, rather than even more heavily the income of the nation's most productive people. I am an old divorced man with modest assets- a VAT will hit me directly. But it will be better for the country, and its people's moral stature. In these debates some people seem to forget that high earners already pay an overwhelming proportion of the income taxes paid in our fair land. Ha

a VAT is totally contrary to our current tax code and it would hit the lower income people soooo much harder than the higher 1s. it is a really bad idea, we should do everything we can to prevent a VAT

[Westernskies]

Quote:

Originally Posted by jdw_fire incomes greater than $200k for a single and $250K for a couple are very affluent (rich) and should be taxed at a higher rate.

WHY? Just because you think so? What is your rationale for supporting these arbitrary tax thresholds?

Quote:

Originally Posted by jdw_fire a VAT is totally contrary to our current tax code and it would hit the lower income people soooo much harder than the higher 1s. it is a really bad idea, we should do everything we can to prevent a VAT

Anything "contrary to our current tax code" deserves serious consideration, IMO. Many people pay no federal taxes, there are also way too many shelters, loopholes, etc. Personally, I think a VAT or flat tax tax is the fairest tax system- everyone has to pay a share and those who spend more, pay more. I believe we should do everything we can to promote a VAT or flat tax. What we have now isn't working; the multi-tiered system promotes class warfare and encourages a welfare state.

Just my two cents worth- which you probably want to tax me for having.

[GregLee]

Quote:

Originally Posted by haha But it will be better for the country, and its people's moral stature.

Taxing the poor improves their morals? Well, uh, that's quite a strange view. Interesting, though. The rich, I suppose, do not require moral improvement.

[ERD50]

Quote:

Originally Posted by Gone4Good There's been a tremendous sales pitch that's been going on for a couple of decades now that seems to have really made an impact. It's gotten to the point where many folks think the only thing that matters to the economy is the level of marginal tax rates. But don't ask them to reconcile faster growth and lower unemployment during the 1990's when taxes were higher than during all of the 2000's when rates were lower. Or faster growth rates in the 50's when marginal rates were much, much higher.

Actually, a number of us have answered that directly a number of times. Clearly, you are not interested in the answers. You seem to have your own sales pitch going on.

Reader's Digest Version: 1990's - bubbles. 1950's high marginal tax rates - Congress wrote broad exceptions in to the tax code (commonly referred to as 'loopholes'), people weren't paying those rates.

edit/add: On a more constructive note - I'd prefer to see tax simplification before we mess with marginal rates. Maybe marginal rates should/need to be higher. But with all the junk in that tax code, you don't really know what anyone is paying, regardless of a range of incomes.

-ERD50

[haha]

Quote:

Originally Posted by ERD50 1950's high marginal tax rates - Congress wrote broad exceptions in to the tax code (commonly referred to as 'loopholes'), people weren't paying those rates. -ERD50

I just ignore people who opine about high rates of the 50s with no experience to draw on. Like you say, no one with any meaningful income paid the posted rates.

And to directly address the endorsement of high tax rates as furthering economic growth- what countries are growing fastest today? Asian low re-distribution economies, or European high re-distribution economies?

It is usually a waste of time to pay attention to someone's arguments unless his personal support arrangements are known.

Ha

[Westernskies]

Quote:

Originally Posted by haha what countries are growing fastest today? Ha

Actually, ha it is the countries that have expanding maufacturing bases, which many of the pundits here on FIRE believe the US can thrive without...

[ziggy29]

Quote:

Originally Posted by haha I just ignore people who opine about high rates of the 50s with no experience to draw on. Like you say, no one with any meaningful income paid the posted rates.

Yep. A lot of people talk about the "tax cuts" and wanting rates to be more like they were in the pre-Reagan era, but when you ask if that means restoring all the pre-Reagan era writeoffs, you tend to hear crickets.

[ERD50]

Quote:

Originally Posted by haha And to directly address the endorsement of high tax rates as furthering economic growth- what countries are growing fastest today? Asian low re-distribution economies, or European high re-distribution economies? Ha

Odd bit of coincidence here - earlier I was googling about job creation, and I came across this link. I skimmed, a little confused until I saw it was from 1997.

The United States as a Job Creation Machine: an Example for Germany?

A few tid-bits:

The United States as a Job Creation Machine: an Example for Germany?--Flemming Larsen

Quote:

Characteristics of the U.S. Labor Market compared with Germany Comparing the German and U.S. labor markets will shed some light on the large differences in job creation, despite similar technology and external conditions. In the United States enterprises and workers respond directly to market incentives: the government and union presence in the labor market is more limited wage determination is less centralized and developments are guided by market forces; there is little emphasis on incomes policies social welfare benefits are not as generous, they are available for relatively short periods, and they are designed to give incentives for recipients to search for new and better job opportunities and the wedge between gross wages and take-home-pay, caused by income taxes and social security contributions, is much smaller.

A lesson (in reverse) for today?

-ERD50

[haha]

Quote:

Originally Posted by GregLee Easily? Really? You seem to live in a very different world from mine. My wife and I just retired from being college professors, and our combined income, with 39 years of seniority, never came close to $250,000. It was about a quarter of that. That $250,000 sure sounds rich to me.

So your combined income was no more than $75K? I am very sorry, with all that study and loans and all. You guys could have been King County Metro bus drivers and made much much more- no PhDs required.

"After two years of tapping reserves, boosting fares, surviving on federal grants and postponing new routes, King County Metro Transit managers now are looking behind the wheel for savings.

Metro drivers rank third nationally in wages, with a top rate of $28.47 an hour, and the average yearly income, including overtime, is almost $61,000 a year, according to a Metro review that includes full- and part-time drivers."

Local News | Cash-strapped Metro targets drivers' pay | Seattle Times Newspaper

[Texas Proud]

Quote:

Originally Posted by Gumby This guy says the proposal on the table does NOT extend UI past the 99 weeks. Kid Dynamite's World: No - People Are Not Collecting 13 More Months of Unemployment Benefits

Since I was going with the reporting.... I thought otherwise... and as the post seemed to indicate... the prez was saying something that would make you believe it went to the 99ers.... if not... good...

[clifp]

Quote:

Originally Posted by haha I just ignore people who opine about high rates of the 50s with no experience to draw on. Like you say, no one with any meaningful income paid the posted rates. And to directly address the endorsement of high tax rates as furthering economic growth- what countries are growing fastest today? Asian low re-distribution economies, or European high re-distribution economies? It is usually a waste of time to pay attention to someone's arguments unless his personal support arrangements are known. Ha

You are right. The biggest shock to me as young engineer was how much time the senior engineers (who would have been 50%+ marginal bracket)
pre Reagan tax cuts spent worrying about tax shelters, between oil wells, horse breeding, Llama ranches etc. that it was amazing that any computer chip engineering actually got done. It was constant source of water cooler and lunch chatter. Once the Reagan tax cuts passed discussion of tax shelter really dropped off. The next time I heard lots of discussion about taxes at the office was 15 years latter when the pretty sweet treatment of Incentive Stock Options caused people to get hit by AMT.

I so agree with ERD before we start we fighting about brackets we really need to focus on simplifying the system. Perhaps a form of VAT is the right approach, but the crazy system we have (which actually is slightly less crazy than it was in the 60s and 70s) is incredibly unproductive drag on our economy.

I have managed to game the system so well that amount state, and local taxes I'm likely to pay over the past decade and likely the next one is so small compared to my level of affluence that it is embarrassing.

[haha]

Here's one example- Sen Jim De Mint Republican of SC, says he won't vote for the compromise because it reinstates an estate tax.

Well, on principle I would also oppose any estate tax. But still, in the real world of today, a $5 mln exemption seems more or less reasonable. I don't know if this is indexed, likely not as lawmakers always like a hidden tax increases imbedded in their doings.

Plenty of similar but opposite "principles" among Democrats.

Ha

[BTravlin]

Quote:

Originally Posted by Gone4Good You're wasting your breath. We've had similar conversations here before. The median household income in the U.S. is $50,221 but somehow making 5 times the median never qualifies as "rich" on these boards (and as pointed out above, you probably need to make six or seven times the median to have taxable income of $250k once all of the breaks are figured in). I suspect the disconnect is because this is a well-to-do lot that sees themselves as "middle-class" even when they aren't.

Quote:

Originally Posted by jdw_fire if i am reading what you are saying i agree. incomes greater than $200k for a single and $250K for a couple are very affluent (rich) and should be taxed at a higher rate.

My wife and I used to clear over $250k per year before the housing market and economy went belly up and we never considered ourselves rich. Supporting three kids, saving for their college expenses, paying a mortgage, three vehicles and saving for our retirement plus all the regular day to day expenses sucked up a lot of cash in a hurry. Yes, we were obviously comfortable and I would say upper middle class but I would never have used the term rich to describe ourselves. Compared to a couple making $50k per year, yeah, but in absolute terms, no way.

And location plays a big role here as well since our Midwestern location with it's lower cost of living would definitely make us appear richer than a similar earning family of five living in New York City or other higher cost locales.

And since our income has slipped some 40% since late 2008 I say go ahead and tax the hell out of those "rich" people making $250k as it won't affect us anymore. <SARCASM>

As for a good alternative to our present tax system: Americans for Fair Taxation: FairTax.org

And just to be clear, it's the spending stupid! (not you specifically, Gone4Good or jdw)

[Texas Proud]

Quote:

Originally Posted by BTravlin My wife and I used to clear over $250k per year before the housing market and economy went belly up and we never considered ourselves rich. Supporting three kids, saving for their college expenses, paying a mortgage, three vehicles and saving for our retirement plus all the regular day to day expenses sucked up a lot of cash in a hurry. Yes, we were obviously comfortable and I would say upper middle class but I would never have used the term rich to describe ourselves. Compared to a couple making $50k per year, yeah, but in absolute terms, no way. And location plays a big role here as well since our Midwestern location with it's lower cost of living would definitely make us appear richer than a similar earning family of five living in New York City or other higher cost locales. And since our income has slipped some 40% since late 2008 I say go ahead and tax the hell out of those "rich" people making $250k as it won't affect us anymore. <SARCASM> As for a good alternative to our present tax system: Americans for Fair Taxation: FairTax.org And just to be clear, it's the spending stupid! (not you specifically, Gone4Good or jdw)

Maybe one of the problems is that rich people don't feel rich...

But sorry to say... if you are making $250,000 or more a year... you are in the top 1.5% of income earners... to me that would be a good level to say 'rich' in income terms...

Now, you can choose to spend that all (and more) and not have much to show for this level of income.... but trying to make it appear that this level is not at the 'rich' level shows how some just do not understand where most people are...

Last night I was telling my wife that we are 'well off' and I make a LOT less than the $250K level...

[Texas Proud]

OK.... saw this in an article (newspaper... seems they get it right more than the TV)...


"The deal between Obama and Republicans doesn't extend that upper limit but adds funding to allow 7 million people who haven't used up their 99 weeks to continue receiving checks."

So it seems that if you have reached your 99 weeks... you stop receiving checks... good news...

[Danmar]

Generally US top marginal tax rates are low by international standards. Surprisingly (perhaps) is that compartively speaking a very high proportion (co pared to other countries) of personal income taxes are collected from the top income earners. I live in the lowest tax jurisdiction in Canada and my marginal tax rates are higher than Bill Gates. The US must raise taxes- who do you think should pay?