Interesting insight for taxing millionaires

[srellim234]

Nobel prize winning economist Joseph Stiglitz has some interesting observations about exactly what I've been saying about the descrepancy between haves and have-nots hurting our country and justifies additional taxes on the wealthiest millionaires.

This article will not sit well with conservatives but it makes some sense.

http://www.calbuzz.com/2011/04/why-tax- ... slam-dunk/

[szh]

The point that is often missed is that those same "haves" also pay the majority of the taxes in this country!

I will find that earlier of mine and get you the facts here.

Z

[IBCoupe]

...And, yet, we still don't have enough money.

[srellim234]

I understand that, z. The widening discrepancy between the haves and have-nots is not necessarily good for the health of the country and does need to be addressed. Not sure what the answer is but I can see the legitimacy of calls for taxing the top tier a little more. Not that I necessarily agree with it but as I see the widening gap hurting the country I can see why some would call for increased taxes to address it.

[szh]

...And, yet, we still don't have enough money.

Hmmm ... define "enough".

The problem is that we are not willing to belt-tighten everywhere. Living within our means seems to become a damn difficult thing to do for our government.

Why?

Z

[szh]

As I once said (in another thread) some years ago:

I wish we could run the company I work for the same way Government likes to run itself!

- Revenue does not match expenses? No problem! Just reach into other pockets and take what we want - if they complain, pass laws and legally enforce them! All with a casual "You are not paying your fair share".

- Too many people on our payroll? We have deadwood staff? No problem! Just run at a deficit and keep motoring on - the money will show up eventually. No such thing as a negative bank account!

At my company, we would not have had to lay off people back in 2001 (went from 64 to 37 because we would have run out of money ... our startup company was growing but not making enough revenue). Good people had to go because we simply could not afford it.

Afterwards, we became profitable for a few years, but had to do a smaller lay off in 2007 (went from 55 down to 45 because we were changing our product and needed the funds to survive the transition). Again, good people had to go because we simply could not afford it.

The lack of true financial accountability in government, the attitude that "we can just increase taxes to account for shortfalls" rather than the far better "lets cut spending", etc., is simply unacceptable and irresponsible and a classic over-reach.

When the economy falters, companies and people tighten their belts and do what it takes to make it. The same needs to be true for government. When the economy is down, tax revenue is going to be down. The harsh reality is that this means government spending needs to be cut as well. Just like company expenses. And just like personal spending. You cannot spend what you don't have.

Trying to extract more tax revenue from company's and people who are also tightening their belts because of economic problems, is a positive feedback situation ... it contribute more to the hurt, does not solve it.

Z

[szh]

A young woman was about to finish her first year of college. Like so many others her age, she considered herself to be a very liberal Democrat, and was very much in favor of the redistribution of wealth.

She was deeply ashamed that her father was a rather staunch Republican, a feeling she openly expressed. Based on the lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his.

One day she was challenging her father on his opposition to higher taxes on the rich and the addition of more government welfare programs. The self-professed objectivity proclaimed by her professors had to be the truth and she indicated so to her father.

He responded by asking how she was doing in school. Taken aback, she answered rather haughtily that she had a 4.0 GPA, and let him know that it was tough to maintain, insisting that she was taking a very difficult course load and was constantly studying, which left her no time to go out and party like other people she knew.

She didn't even have time for a boyfriend, and didn't really have many college friends because she spent all her time studying.

Her father listened and then asked, "How is your friend Audrey doing?"

She replied, "Audrey is barely getting by. All she takes are easy classes, she never studies, and she barely has a 2.0 GPA. She is so popular on campus; college for her is a blast. She's always invited to all the parties, and lots of times she doesn't even show up for classes because she's too hung over."

Her wise father asked his daughter, "Why don't you go to the Dean's office and ask him to deduct a 1.0 off your GPA and give it to your friend who only has a 2.0. That way you will both have a 3.0 GPA and certainly that would be a fair and equal distribution of GPA."

The daughter, visibly shocked by her father's suggestion, angrily fired back, "That wouldn't be fair! I have worked really hard for my grades! I've invested a lot of time, and a lot of hard work! Audrey has done next to nothing toward her degree. She played while I worked my tail off!"

The father slowly smiled, winked and said gently, "Welcome to the Republican party."

Z

[donandal]

I won't go into what I don't agree with that was so insightful from a noble prize winner...
Obama got one and even he knows he didn't deserve it....
but I do agree with the idea of the 99% ...1% needing both to be "in the game" for the
good of both...so to speak
that's what wrong with our country now...too many people pay no taxes,they just freeload
and they aren't in the game, so they just want to keep raising taxes on the other guy
when was the last time some one ask the freeloader " ask what you can do for your country "
get them back in the game and paying a nickle to the cause
taxing millionares won't fix this...cutting spending will

[szh]

taxing millionares won't fix this...cutting spending will

Z

[stebo0728]

Resurect the notion of personal responsibility, and make it stick, and maybe the "have nots" will figure out a way to "have"

[szh]

Let's use facts rather than myths and beliefs. This is from another old post of mine - yes, the info is a bit dated, but you can easily find the latest figures and see the same basic outcome for yourself:

2005 Effective Tax Rates:

Top 1% 31.2%
Top 5% 28.9%
Top 10% 27.4%
Top 20% 25.5%
Top 40% 17.4%

Source: http://www.cbo.gov/ftpdocs/88xx/doc8885 ... xRates.pdf

Thanks! Let's use your source to illustrate some more points! Using the data for 2005 on page 6 of that document:

1. In the Top 1% (1.1 million households), average pre-tax income was $1,558,500 and average post-tax income was $1,071,500 for that percentage of 31.2% of their income paid in taxes. The average tax payment was thus $487,000 per household! Total tax dollars paid: $535,700,000,000.

That is 535 Billion dollars.

2. In the Top 5% (5.8 million households), average pre-tax income was $520,200 and average post-tax income was $369,800 for that 28.9% of their income paid in taxes. The average tax payment was thus $150,400 per household. Total tax dollars paid: $872,320,000,000.

That is 872 Billion dollars.

3. In the Top 10% (11.7 million households), average pre-tax income was $339,100 and average post-tax income was $246,300 for that 27.4% of their income paid in taxes. The average tax payment was thus $92,800 per household. Total tax dollars paid: $1,085,760,000,000.

That is 1,085 Billion (or 1.085 Trillion) dollars.

Thus, since the total tax was $1,992,300,000,000:

1. The top 1% of wage earners paid 26.9% of the total taxes.
2. The top 5% of wage earners paid 43.8% of the total taxes.
3. The top 10% of wage earners paid 54.5% of the total taxes.

Some more information:

1. The bottom 20% of wage earners paid 4.3% of their income in taxes.
2. The next 20% of wage earners paid 9.9% of their income in taxes.
3. The next 20% of wage earners paid 14.2% of their income in taxes.
4. The next 20% of wage earners paid 17.4% of their income in taxes.
5. The top 20% of wage earners paid 25.5% of their income in taxes.

This, inspite of the miraculous tax shelters the rich seem to find that were not available or accessible to the poor!

By the way, the reason the bottom 20% above actually paid less than the Social Security rate, is because their Federal income tax rate were actually -6.5% (that is right, negative!), and then SS and other taxes (Corp, Excise) kicked in to make the number go back above 0%).

The next 20% had individual income tax rates of -1.0% (also negative) before the other taxes kicked in to make it +9.9%.

Here are some more interesting calculations from those numbers in that document.

1. The bottom 20% of wage earners (24.1 million households) paid 0.7% of the total taxes.
2. The next 20% of wage earners (22 million households) paid 4.1% of the total taxes.
3. The next 20% of wage earners (22.2 million households) paid 9.2% of the total taxes.
4. The next 20% of wage earners (22.6 million households) paid 16.9% of the total taxes.
5. The top 20% of wage earners (23.1 million households) paid 68.5% of the total tax.

Not only do the rich pay MORE in percentages, they pay more in absolute amounts, and a far larger percentage of the total tax collected!

Amazing how cold hard facts can easily show up the myths and beliefs about the rich being greedy people that they are not helping the country out and not paying their "fair share" - either percentages OR absolute dollars - and are hiding all their money in tax shelters, etc., etc., etc.

Edit: I just noticed that page 7 of that PDF shows these percentages too!

Z

[szh]

Not sure what the answer is but I can see the legitimacy of calls for taxing the top tier a little more. Not that I necessarily agree with it but as I see the widening gap hurting the country I can see why some would call for increased taxes to address it.

As you can see from the data, the top 1% of the US tax payers are already paying more than 26% of the total taxes collected in the country - more than 31% of their income was paid as tax.

And the top 20% of the tax payers are paying more than 68% of the total taxes collected in the country - more than 25% of their income was paid as tax.

Why would it be okay to ask them to pay more?

Z

[srellim234]

Again, I'm not sure what the answer is but the widening gap is hurting the country.

Additionally, you don't take into account what those people are making and how much of the wealth they control. From the article, "...The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent.....While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall... While they control 40% of the wealth, the top 1% pay 31.2% of the taxes. While their income has increased, the middle class has watched incomes decline. Of course the top 1% pay more. How could they not based on those income figures!

Same thing all the way down the board. Your figures are meaningless unless they are weighed against the income and wealth control side of the equation.

[srellim234]

This professor goes into a lot more analysis here;

http://sociology.ucsc.edu/whorulesameri ... ealth.html

Definitely worth taking the time to read and digest.

[donandal]

Z, you are sooooo right !
I have seen this tax data before , and it still amazes me
It is corrosive to the soul of the nontaxpayer...when you take away
their contribution to America.....
the excessive social welfare reminds me of drug dealers...
get em hooked on welfare, keep em there , and get a steady stream of votes

[heliochrome85]

heaven forbid we actually cut defense spending. lord knows we dont hae enough F22 fighters which as of this, have yet to actually see action and are already being considered obsolete.

[stebo0728]

heaven forbid we actually cut defense spending. lord knows we dont hae enough F22 fighters which as of this, have yet to actually see action and are already being considered obsolete.

Were they ever even used in combat? I had heard they've never seen a dawn of battle.

[IBCoupe]

taxing millionares won't fix this...cutting spending will

There aren't enough cuts in the budget to realistically fix it. You have to raise revenues, too.

Z, we might not have been making ends meet before, but the huge deficit is a result of a drastic decrease in revenues from the recession, not simply from excessive spending. Yes, we need to cut back on government programs, but we're not going to get all the way to where we need to be simply on that plan.

[szh]

I recognize that cuts are always difficult to determine - everybody has their pet project that is deemed to be "off limits".

The problem is that the proposed "revenue increase" is being asked of people who are already paying more than others.

To me, that is simply not fair.

Z

[stebo0728]

I recognize that cuts are always difficult to determine - everybody has their pet project that is deemed to be "off limits".

The problem is that the proposed "revenue increase" is being asked of people who are already paying more than others.

To me, that is simply not fair.

Z

Ya, try to keep the percentage difference the same as it is now and just raise all rates across the board, and then see what kind of lamenting you get from the left

"Oh but the poor .... they already cant pay .... when all the rich just have all that money lying around ...."

Z, its a lost cause im afraid

Now when the producers finally decide to go on strike for once, that will be the day of reckoning

[IBCoupe]

http://www.nytimes.com/interactive/2009 ... lines.html

[stebo0728]

Very interesting tool, if you just select college graduate, then one at time look at all the curves for college graduate, they are all below the average, and some way below. Resulting premise: perhaps applying ones self and actually hoofing it on your own is a bit more productive?

[donandal]

Again, I'm not sure what the answer is but the widening gap is hurting the country.

Additionally, you don't take into account what those people are making and how much of the wealth they control. From the article, "...The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent.....While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall... While they control 40% of the wealth, the top 1% pay 31.2% of the taxes. While their income has increased, the middle class has watched incomes decline. Of course the top 1% pay more. How could they not based on those income figures!

Same thing all the way down the board. Your figures are meaningless unless they are weighed against the income and wealth control side of the equation.

this sounds to me like you concede to the higher tax rate and higher total dollars paid arguement put forth by Z...
but like a typical lib, you still aren't happy with the outcome....
you want to drag everybody down one way or the other ( outcome based tax code ? )
well maybe it's just that rich people still find ways to be successful in spite of unfair tax rates
and libs just can't stand it

[srellim234]

but like a typical lib, you still aren't happy with the outcome....
you want to drag everybody down one way or the other ( outcome based tax code ? )...

You don't have clue whether I'm liberal or not. In fact, I'm far from it. What I do recognize is history repeating itself and it will destroy this country if wealth continues to consolidate itself in ever-higher percentages of the top tier without a greater investment by them in the other classes in this country.

As for dragging everybody down, that is a very ignorant view. The long term success of the upper class in any society is dependent on their investments in infrastructure and making sure the other classes in that society also succeed. That's why so many societies are undergoing upheaval around the world right now; the lower classes are rebelling against those to the top who have not invested sufficiently in the success of the entire society.

Our current system is not working. It needs to be changed. It needs to be changed in a way that insures success for all who earn it. The elimination of the middle class, which both the GOP and the Democratic Parties desire as members of an elite ruling class, is dooming the country.

[stebo0728]

Our current system is not working. It needs to be changed. It needs to be changed in a way that insures success for all who earn it.

Couldnt have possibly said it better myself.

[srellim234]

z- your figure that shows such a disparity in the rich paying the taxes shows only federal income taxes. It does not cover all taxes, as explained by Professor Domhoff in the article I linked above. While the figures show a little progressiveness in the taxes paid, it s nowhere near the percentages you cite since you don't include overall contributions. In fact, the top 1% pay less overall than the next 4%.

Some of it is under the heading "Do Taxes Redistribute Income?" a little over halfway down the page.

I think we all agree that the current system is broken. We need to look at history in older countries and failed regimes to try and learn from their examples. Otherwise we are doomed to failure, too.

[bigbadberry3]

http://asheham.wordpress.com/2011/03/10 ... as-wealth/

[szh]

z- your figure that shows such a disparity in the rich paying the taxes shows only federal income taxes. It does not cover all taxes, as explained by Professor Domhoff in the article I linked above. While the figures show a little progressiveness in the taxes paid, it s nowhere near the percentages you cite since you don't include overall contributions. In fact, the top 1% pay less overall than the next 4%.

Uh, nope. I think you misunderstood the figures from the CBO report - the data is the amount of actual tax dollars paid by those individuals. So, it includes taxable income for those people - no matter what the source, and includes the "deductions" we rail against.

Yes, of course, it shows Federal income tax ... clearly, any other taxes (like the property taxes I pay for my house - go to the state though) are additional tax burdens we put on everybody. The fact is that we all pay far more money to "government" (I am including Fed and State together here) in taxation than we really should - things like property taxes, driver's license fees, sales taxes, car registration fee's, fishing licenses, etc., etc., etc., add up. The total amounts actually collected by "government" is a surprisingly high percentage of everyone's "income".

Please do re-read the CBO report to understand the true implications!

I think we all agree that the current system is broken. We need to look at history in older countries and failed regimes to try and learn from their examples. Otherwise we are doomed to failure, too.

What failed regimes (i.e., their tax systems) should we look at to learn from?

Z

[srellim234]

We can certainly look to places where people have rebelled against powerful families on top. The current situation in the Middle East comes to mind. Large percentages of wealth held by a very small percentage at the top leads to a lack of success and hope for the masses. In such cases they will fight back in the only way they can -- with violence and overthrow.

[IBCoupe]

Very interesting tool, if you just select college graduate, then one at time look at all the curves for college graduate, they are all below the average, and some way below. Resulting premise: perhaps applying ones self and actually hoofing it on your own is a bit more productive?

Ah, so college actually DOES help?