Only 2 things are certain: death and taxes...

[LogGrad98]

https://news.yahoo.com/s/ap/20110417/ap_on_bi_ge/us_no_taxes

The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.
Over the same period, the average federal income tax rate for all taxpayers declined to 9.3 percent from 9.9 percent.
The top income tax rate is 35 percent, so how can people who make so much pay so little in taxes? The nation's tax laws are packed with breaks for people at every income level. There are breaks for having children, paying a mortgage, going to college, and even for paying other taxes. Plus, the top rate on capital gains is only 15 percent.

More than half of the nation's tax revenue came from the top 10 percent of earners in 2007. More than 44 percent came from the top 5 percent. Still, the wealthy have access to much more lucrative tax breaks than people with lower incomes.
Obama wants the wealthy to pay so "the amount of taxes you pay isn't determined by what kind of accountant you can afford."

The vast majority of those who escape federal income taxes have low and medium incomes, and most of them pay other taxes, including Social Security and Medicare taxes, property taxes and retail sales taxes.

A deliciously spun article. Not very objective, but an interesting topic this time of year.


It always interests me how easy it is to make the "super rich" such evil villains since they "only" pay 50% of the total tax collected. I also find it interesting that they want to cut taxes for medium income families, who largely pay no taxes anyway. So the Robin Hood effect: take from the rich, give to the poor.

Obviously more complex than that, but what do you think about taxes?

 

[The Pearl]

I have several clients who have told me the same thing and that is they have paid about a 17% federal tax rate and have for over two decades, regardless of level of earnings. I have heard this from many CPA's also. This is sort of personal tax rate example of Hauser's Law. I suspect there is a lot more evidence to support some kind of single tax rate. In reality there are really probably only 3 significant tax rates...0%, somewhere around 8 to 10% and 17%.

 

[sirkickyass]

I have several clients who have told me the same thing and that is they have paid about a 17% federal tax rate and have for over two decades, regardless of level of earnings. I have heard this from many CPA's also. This is sort of personal tax rate example of Hauser's Law. I suspect there is a lot more evidence to support some kind of single tax rate. In reality there are really probably only 3 significant tax rates...0%, somewhere around 8 to 10% and 17%.

Jesus H I wish that were true. The world looks a lot different when you live in an apartment, earn your money exclusively through wages rather than capital gains, and don't have children or dependents. My 2009 and 2010 returns put me at a 21% rate (and yes, I do my taxes correctly). I know I'm not anywhere near the top 1% in terms of AGI.

I think this also understates the way in which FICA is functionally regressive due to its caps and the types of money that it touches. Taking that into account it's possible that the person who pays the highest real tax rate is the childless apartment dweller who makes $106,000 per year in employer wages.

 

[Archie Moses]

Jesus H I wish that were true. The world looks a lot different when you live in an apartment, earn your money exclusively through wages rather than capital gains, and don't have children or dependents. My 2009 and 2010 returns put me at a 21% rate (and yes, I do my taxes correctly). I know I'm not anywhere near the top 1% in terms of AGI.

I think this also understates the way in which FICA is functionally regressive due to its caps and the types of money that it touches. Taking that into account it's possible that the person who pays the highest real tax rate is the childless apartment dweller who makes $106,000 per year in employer wages.

This is true.

 

[Hantlers]

Jesus H I wish that were true. The world looks a lot different when you live in an apartment, earn your money exclusively through wages rather than capital gains, and don't have children or dependents. My 2009 and 2010 returns put me at a 21% rate (and yes, I do my taxes correctly). I know I'm not anywhere near the top 1% in terms of AGI.

I think this also understates the way in which FICA is functionally regressive due to its caps and the types of money that it touches. Taking that into account it's possible that the person who pays the highest real tax rate is the childless apartment dweller who makes $106,000 per year in employer wages.

You should have kids.

 

[sirkickyass]

I have several clients who have told me the same thing and that is they have paid about a 17% federal tax rate and have for over two decades, regardless of level of earnings. I have heard this from many CPA's also. This is sort of personal tax rate example of Hauser's Law. I suspect there is a lot more evidence to support some kind of single tax rate. In reality there are really probably only 3 significant tax rates...0%, somewhere around 8 to 10% and 17%.

Here's pretty solid evidence that the solid 17% theory is incorrect.

https://www.cbo.gov/ftpdocs/77xx/doc7718/EffectiveTaxRates.pdf

with additional supporting tables available at: https://www.cbo.gov/doc.cfm?index=7718

Average effective rates for the top 1% in various years corresponding to major tax law changes:

1980: 34.6%
1982: 27.7%
1992: 30.6%
1994: 35.8%
2000: 33.0%
2004: 31.1%

 

[babe]

I have several clients who have told me the same thing and that is they have paid about a 17% federal tax rate and have for over two decades, regardless of level of earnings. I have heard this from many CPA's also. This is sort of personal tax rate example of Hauser's Law. I suspect there is a lot more evidence to support some kind of single tax rate. In reality there are really probably only 3 significant tax rates...0%, somewhere around 8 to 10% and 17%.

I'm sure Pearl is looking at his experience with the system, not the government's data miners. I thought pretty much the same thing because there are three modes of interacting with the government. One is to hitch a free ride, no sweat. These guys of course pay zero. Mooch a lot, too. Then there's the hopeless poor working stiffs whose wages are continually being degraded in one way or another by their employers. Then there's the savvy madashell fighters who analyze all the opportunities in the book, above and below the table, to "win" the game. A few of these, like I imagine the Rockefellers, have perfected the art of buying the best accountants and lawyers money can buy, and politicians as well, who have set up the whole game. I bet they are net takers in spades.

But most do not have the resources to play the game that way, and they just take a more moderate path of reducing their taxes, exchanging risk management for some tax payments. They do the 17%. I guess the unmarried, childless(except the pooch who will kiss you no matter what), farmless, businessless, homeless yuppies/professionals who get stuck with the 30% hit might be a fourth class, but oh maybe only ten percent. Then there's all the government workers who have no right to complain at all about taxes even if they pay the max rate, they get it all back in superfluous benefit packages most American workers have lost already.

Problem is, obserations like this are essentially anecdotal. Might be true, but we just don't have the statistical info. . . . . and while the CBO can write reports and maybe even try to be reliable, they're stuck with the stories people report. . . . .

A lot of illegals working the underground economy, as well as others. . . . and just a whole lot of sloppy record keeping. . . . . and a whole lot skimming goin' on whenever people have cash placed in the palm of their hands. I bet no congressman really takes the CBO seriously. . . . . and a lot of sheer crooks who haven't secured an incumbency cashcow yet, not to mention outright mobsters like Harry Reid.

I can't fault Kicky's research but lets just say, how many of us wanna believe the gov stats, knowing our relatives and neighbors and what they do versus what they report. . . . . still a lot of folks are really vested in authoritative sources of info, and who knows, maybe I just stopped believing it and just can't anymore. . . . .

still, my questions/observations are in fact anecdotal. . . . . and so I just can't say the stats aren't closer to the truth. . . .

 

[franklin]

That saying has been upgraded to three things are certain in life: death, taxes, and war in the Middle East.

It always interests me how easy it is to make the "super rich" such evil villains since they "only" pay 50% of the total tax collected. I also find it interesting that they want to cut taxes for medium income families, who largely pay no taxes anyway. So the Robin Hood effect: take from the rich, give to the poor.

Obviously more complex than that, but what do you think about taxes?

What % of the contract revenue do they collect? Cargill is over $100 bln in annual sales. How much of that is govt. subsidized directly or indirectly through policy mandates and foreign dumping of corn?

I like this as the best starting point: https://townhall.com/columnists/thomassowell/2011/04/12/another_spending_cut_plan/page/full/

 

[VINYLONE]

Doesnt all this talk make a consumption tax even more appealing?

 

[sirkickyass]

Doesnt all this talk make a consumption tax even more appealing?

If you mean as a replacement for the income tax then absolutely not. Consumption taxes are functionally regressive. That's a classic way to make the poor poorer.

I bet no congressman really takes the CBO seriously. . . . . and a lot of sheer crooks who haven't secured an incumbency cashcow yet, not to mention outright mobsters like Harry Reid.

I can't fault Kicky's research but lets just say, how many of us wanna believe the gov stats, knowing our relatives and neighbors and what they do versus what they report. . . . . still a lot of folks are really vested in authoritative sources of info, and who knows, maybe I just stopped believing it and just can't anymore. . . . .

still, my questions/observations are in fact anecdotal. . . . . and so I just can't say the stats aren't closer to the truth. . . .

It is very easy to cling to bad ideas when you've institutionalized a worldview that dismisses all evidence, no matter how non-partisan or authoritative, that could contradict what you've previously believed. It's even worse when you're proud of it.

I also find it interesting that they want to cut taxes for medium income families, who largely pay no taxes anyway.

Somehow missed this the first time around. I have a strong suspicion that families at the median would strongly disagree with the assertion that they pay no taxes. FICA alone ...

Although from the general tenor of your post I presume you are against progressive taxation as a concept to begin with.

 

[PearlWatson]

That's a classic way to make the poor poorer.

The classic way to make the poor poorer is to make them dependent.

 

[LogGrad98]

Somehow missed this the first time around. I have a strong suspicion that families at the median would strongly disagree with the assertion that they pay no taxes. FICA alone ...

Although from the general tenor of your post I presume you are against progressive taxation as a concept to begin with.

I am against taxes in general, although I can recognize they are a necessary evil. I think the tax code is so jacked up from every single president/congress/whatever politician jacking with it that it bears no semblence of fairness for anyone. And generally speaking I am not a fan of prorgressive tax. It is inherently not fair to say that someone who made more money than someone else needs to foot the bill for everyone. The interesting thing is, in real dollars, they already do.

I really just get tired of hearing constantly that the rich "pay nothing" while the low-income families are nearly bankrupted by their high taxes. Democrats especially use broad sweeping generalizations that, if you took them at face value, would mean that no one with a salary in the 6 figure range and above has ever paid taxes in their life, and everyone making under 50k pays their entire salary in taxes to support the extravagant lifestyles of the aforementioned "rich". (yes, hyperbolic I know, but that is often how it sounds coming from the politicians too). When really if you break it down those who make the most money pay the most taxes measured in dollar paid.

Percentage-wise it is really the upper-midddle income brackets that pay the highest rates (me included in that club). If you make 75k to 200k you are paying a solid chunk in taxes on a percentage basis. I remember topping 6 figures for the first time and that seemed like a magic tipping point where the year before we got a little back and that year got fleeced.

As far as FICA goes, that is the most screwed up system we have in our governmental finances. The social security system has been raped and damaged beyond repair. It needs to be torn down and rebuilt from the ground up. It is also one of the many forms of double-taxation that is inherent in our tax system. Yes this is one area where lower income levels feel more of the pain since those with substantially higher income report more capital gains (which has no FICA attached to it). However, again it is those in the upper-middle income brackets who really eat it, as there are fewer breaks that bring back money at those levels. Many households in lower tax brackets will get back money, the majority getting money back while not paying primary income taxes at all. In most cases this covers FICA.

I would like to see some mix of a moderately progressive tax combined with a consumption tax. I think something along those lines could work. You could also do this with a national consumption tax progressive to "luxury" goods combined with a flat tax.

 

[LogGrad98]

Doesnt all this talk make a consumption tax even more appealing?

More appealing? Yes. The answer? No.

I do like the idea of some kind of flat tax though.

 

[franklin]

I really just get tired of hearing constantly that the rich "pay nothing" while the low-income families are nearly bankrupted by their high taxes. Democrats especially use broad sweeping generalizations that, if you took them at face value, would mean that no one with a salary in the 6 figure range and above has ever paid taxes in their life, and everyone making under 50k pays their entire salary in taxes to support the extravagant lifestyles of the aforementioned "rich". (yes, hyperbolic I know, but that is often how it sounds coming from the politicians too). When really if you break it down those who make the most money pay the most taxes measured in dollar paid.

After the housing crash, you'd think we would learn our lesson of what happens when policy is born from sweeping generalizations based in envy. Everyone deserved the American dream of home ownership, so we enacted laws that lead to housing prices skyrocketing and subsequently crashing when people could no longer afford to live. But here we are, as always, bitching and moaning about how to make things more fair and give everyone what they deserve.

I too would like to see policy that equalizes incomes, but it has nothing to do with envy. It's more about economic freedom and welcoming people into the upper middle class. As it stands there is little incentive to work too far up the chain.

There are labor issues on top of the tax problems you two are examples of. I could become much more productive but my industry has this nasty way of tying people into a job for a few years and then working them 70 hours a week on 40 hour week wages. Between the hours and taxes the trade off isn't worth it. "Exempt" is a dirty word from my birds eye view.

The incentives aren't there because our government has failed to protect them. Hard line conservatives effectively stop any labor gains regardless of the underlying situation. After all, nobody forced you to sign the contract. I guess conservative principles don't account for indentured servitude, usury, or any other practical slavery. Hard line dems are polar opposites, so we end up with a fight rather than a solution. We "unprincipled moderates" get hurt over the ideals of 50,000,000 American extremists. Fun, fun.

 

[LogGrad98]

After the housing crash, you'd think we would learn our lesson of what happens when policy is born from sweeping generalizations based in envy. Everyone deserved the American dream of home ownership, so we enacted laws that lead to housing prices skyrocketing and subsequently crashing when people could no longer afford to live. But here we are, as always, bitching and moaning about how to make things more fair and give everyone what they deserve.

I too would like to see policy that equalizes incomes, but it has nothing to do with envy. It's more about economic freedom and welcoming people into the upper middle class. As it stands there is little incentive to work too far up the chain.

There are labor issues on top of the tax problems you two are examples of. I could become much more productive but my industry has this nasty way of tying people into a job for a few years and then working them 70 hours a week on 40 hour week wages. Between the hours and taxes the trade off isn't worth it. "Exempt" is a dirty word from my birds eye view.

The incentives aren't there because our government has failed to protect them. Hard line conservatives effectively stop any labor gains regardless of the underlying situation. After all, nobody forced you to sign the contract. I guess conservative principles don't account for indentured servitude, usury, or any other practical slavery. Hard line dems are polar opposites, so we end up with a fight rather than a solution. We "unprincipled moderates" get hurt over the ideals of 50,000,000 American extremists. Fun, fun.

You must spread some Reputation around before giving it to franklin again.

I especially agree with the comments on labor issues. You can also lump me in with those who find "exempt" to be a dirty word. Move your way up in a logistics org and you get the benefit of working more hours (pretty much true in any group of exempts from what I have seen). I just finished a string of 18 16-hour days over 3 weeks to integrate a new acquisition into our warehousing and distribution strategy. Now I have been able to "cut back" to about my normal 60 hours per week. I recgonize I am compensated well and I understand and accept what being exempt means to my organization and my job. I took the job after all. Doesn't mean I have to like it.

And you nailed it in the final paragraph why we can't make any progress, and what has been my issue with the two-party system for years. It does not breed collaboration for the best solutions, it breeds competition to get "MY" ideas implements, regardless of if they are good or not. This is just another area of policy that proves it.

 

[PearlWatson]

You must spread some Reputation around before giving it to franklin again.

I especially agree with the comments on labor issues. You can also lump me in with those who find "exempt" to be a dirty word. Move your way up in a logistics org and you get the benefit of working more hours (pretty much true in any group of exempts from what I have seen). I just finished a string of 18 16-hour days over 3 weeks to integrate a new acquisition into our warehousing and distribution strategy. Now I have been able to "cut back" to about my normal 60 hours per week. I recgonize I am compensated well and I understand and accept what being exempt means to my organization and my job. I took the job after all. Doesn't mean I have to like it.

And you nailed it in the final paragraph why we can't make any progress, and what has been my issue with the two-party system for years. It does not breed collaboration for the best solutions, it breeds competition to get "MY" ideas implements, regardless of if they are good or not. This is just another area of policy that proves it.

While you like the bottom part, I like the top part a whole lot.