Top Earners in America Pay Just 16% Income Tax

[jabarto]

I posted this in News of the Wierd, but Lemur told me to make a new thread. Happy now, buddy?

http://www.taxanalysts.com/www/featu...7?OpenDocument

In short, the top 400 earners in America are paying less taxes and have higher incomes than ever before. Meanwhile wages have been stagnating for decades while the cost of living continues to soar, our public education system is crap, and we have woefully inadequate health care.

I said that (and what I'm about to say) in the news thread, but it boggles my mind that the people who should be pissed about this - the working class who were exploited to get those top earners to where they are - are defending them. America has the completely insane notion that people are rich through hard work and merit, instead of, you know, the typical way that wealth is accumulated here; exploitation, luck, and inheritance.

But I suppose I should tack a discussion point to this post so we can actually discuss things. So I guess my thesis, as it were, will be on raising taxes on the rich. Now I have a few moral reasons for thinking that should be so, but I read a discussion post elsewhere that made a point I had never considered, but agree with, that being that the wealthy business owners (for example) benefit from public services more than any other demographic. Thus it really goes without saying that they should pay more, as they're getting more out of the system than anyone.

But I've rambled enough. Discuss away!

[Crazed Rabbit]

As I said in the NotW, the top 1% of of income tax returns paid 39.9% of all federal income taxes in 2006 - a share that increased from earlier in Bush's presidency, and even though they earned 22% of 'adjusted gross income'.

So I don't quite see how that's a terribly low percentage. The people you cited, the top 400, mainly made income from capital gains - like the stock market, which has a relatively low tax rate compared to wage income.

But guess what - people don't care because they realize the economy is not one set 'pie' where to take a larger slice you have to take something from somebody else. That is not how economics works. Someone else getting richer doesn't make me poorer.

You say they're getting more out of the system? Well they're contributing much more than that in terms of jobs and investments.

CR

[Sasaki Kojiro]

So I don't quite see how that's a terribly low percentage. The people you cited, the top 400, mainly made income from capital gains - like the stock market, which has a relatively low tax rate compared to wage income.

Perhaps jabarto is suggesting an increase in the capital gains tax rate.

[jabarto]

So I don't quite see how that's a terribly low percentage. The people you cited, the top 400, mainly made income from capital gains - like the stock market, which has a relatively low tax rate compared to wage income.

You're right, as is Sasaki. I'm all for taxing capitla gains, inheritance...whatever needs to be done to make the tax effectual.

But guess what - people don't care because they realize the economy is not one set 'pie' where to take a larger slice you have to take something from somebody else. That is not how economics works. Someone else getting richer doesn't make me poorer.

So how, then, do you account for the stagnating wages of workers and steady increase of CEO wages, amongst other things, over the last 40 years?

You say they're getting more out of the system? Well they're contributing much more than that in terms of jobs and investments.

CR

Heh, good one.

[Beskar]

I feel like replying, but you all know what I am going to say.

[Lemur]

Lemur told me to make a new thread. Happy now, buddy?

Yes, thank you very much! I'm freakishly protective of NotW, as many Orgahs can attest. Thank you for taking this discussion to its own space.

[Kadagar_AV]

well.... Thank GOD we have the american dream... You know, working your arse off to against all odds maybe one day have a glimpse of what the rich people have...

it's not like you need things like health care or vacation, no, you have the DREAM!!!

[jabarto]

Yes, thank you very much! I'm freakishly protective of NotW, as many Orgahs can attest. Thank you for taking this discussion to its own space.

Heh, you're welcome. I didn't plan on discussing it at first, but more information has come to light as I read more into it, so I thought I'd open up an avenue for that.

Also I'm too lazy to multiquote but Kadagar pretty much nailed it.

[miotas]

Wow, that is (quite literally) backwards.

[Kadagar_AV]

Also I'm too lazy to multiquote but Kadagar pretty much nailed it.

*bows*

I'll be here all week :)

[Xiahou]

Who cares? IIRC, my effective tax rate for '09 was around 10%- including state taxes. Something like 40% of Americans pay nothing in federal taxes. How much did you pay?

[JAG]

CR - still standing up for the big man I see. ;x

[KukriKhan]

I suppose this is a bad time to propose a "everything is income; no deductions; eliminate separate taxes for SS & Medicare, and bin the IRS" national flat tax of 13%? Some 'experts' claim such funding would easily pay for SocSec, Nat'l Health Care for 50 years, and elimination of national debt in 5.

[Centurion1]

well.... Thank GOD we have the american dream... You know, working your arse off to against all odds maybe one day have a glimpse of what the rich people have...

it's not like you need things like health care or vacation, no, you have the DREAM!!!

lol id rather have my current american standard of living rather than your Scandinavian one no matter how high it is touted.

Jabarto you need to look at all the facts. Do you know that as CR the wealthy pay over a third of america's income. And dont be stupid the CEO tax income does far more for the country that some factory worker's tax incomes (if he even pays) to claim otherwise is just silly.

and if you dont like, then leave. You can go to Sweden ad have a vacation and incredibly high tax rates.

and people who make their money from investment deserve it. They took a bigger risk than you probably ever will. And so do people who form a company.

raising capital gains does absolutely nothing except stagnate business.

[jabarto]

and if you dont like, then leave. You can go to Sweden ad have a vacation and incredibly high tax rates.

Don't you think I would have given the opportunity? Sweden is a bitch to get into if you're not part of the EU.

and people who make their money from investment deserve it. They took a bigger risk than you probably ever will. And so do people who form a company.

Of course it's high risk. That's why literally more than 99% of all business founders fail, and your stupid belief in the "self-made billionaire" is full of holes. You know how those people get rich? It's not because they make brilliant management decisions. They get there by hiring the best workers from college to do all that for them. The owners literally do nothing but sit back and profit from the labor of their subordinates.

I'm not saying risk taking shouldn't be rewarded. I'm saying that pretending that people don't get to that top percentile through exploiting others' labor is foolish.

[Lemur]

and people who make their money from investment deserve it. They took a bigger risk than you probably ever will. And so do people who form a company.

Equating investment income with entrepenurship is ... novel. I would really hesitate to say that a trust-fund brat like Paris Hilton is of the same value and economic promise as somebody who starts their own business.

[Seamus Fermanagh]

I suppose this is a bad time to propose a "everything is income; no deductions; eliminate separate taxes for SS & Medicare, and bin the IRS" national flat tax of 13%? Some 'experts' claim such funding would easily pay for SocSec, Nat'l Health Care for 50 years, and elimination of national debt in 5.

Not too shabby. I prefer a sales tax/consumption tax such as Boortz and company advocate, but this would be a notable improvement.

Jabarto is making a fair dig, and one I have alluded to in previous tax discussions. If the goal of our current tax system is funding government services, it fails -- we run huge deficits and fail to tax ourselves enough to pay for them. If the goal of our current system is to make the wealthy pay for those who have far fewer resources (wealth re-distribution), it fails -- as Rabbit rightly notes, our system does not tax wealth, only income. What we have is a system that taxes income more harshly the more you make, thereby making it harder to "move up" and preserving the extent elites -- clipping coupons and not really earning "income" per se, just distributions from the trust fund -- in their positions of economic privilege.

I would prefer an equitable system -- from each according to what they consume. If we can't get to that level, then at least flatten the tax and make it possible for someone who works hard to get ahead without penalizing anyone else.

[PanzerJaeger]

There is certainly something wrong here. These people should not have to pay more than 10% income taxes. No one should. That money would be better spent on capital investment than going to prop up our ridiculous entitlement system.

Equating investment income with entrepenurship is ... novel.

Venture capitalism, anyone?

[Centurion1]

Of course it's high risk. That's why literally more than 99% of all business founders fail, and your stupid belief in the "self-made billionaire" is full of holes. You know how those people get rich? It's not because they make brilliant management decisions. They get there by hiring the best workers from college to do all that for them. The owners literally do nothing but sit back and profit from the labor of their subordinates.

I'm not saying risk taking shouldn't be rewarded. I'm saying that pretending that people don't get to that top percentile through exploiting others' labor is foolish.

your telling me that all people who become rich are only doing so off the backs of their college graduates. That is grossly inaccurate. Let me give you a very recent example. The founder of UnderArmor, (this comes to mind becaus ei just got into his alma mater) most definetly deserves all the money he made and is making from a business venture he took a huge risk on. No hes not quite a billionaire but he mayvery well end up one.

Did Bill Gates deserve the money he made.

does Steve Jobs?

No lemur i did not mean to equate "inheritance tycoons" with hard working people, those are probably my least favorite individuals, not to say all people with inheritances are like that. i meant people who risk there money on huge investments within stocks and the like and either crash and burn or reap the benefits. Say what you will thats a risk your taking there.

[Strike For The South]

I suppose this is a bad time to propose a "everything is income; no deductions; eliminate separate taxes for SS & Medicare, and bin the IRS" national flat tax of 13%? Some 'experts' claim such funding would easily pay for SocSec, Nat'l Health Care for 50 years, and elimination of national debt in 5.

That would be to simple. There are special interests that need to be fed kukri. C'mon now.

And FTR, Sweden and the US are not comparable countries.

[Seamus Fermanagh]

Of course it's high risk. That's why literally more than 99% of all business founders fail, and your stupid belief in the "self-made billionaire" is full of holes. You know how those people get rich? It's not because they make brilliant management decisions. They get there by hiring the best workers from college to do all that for them. The owners literally do nothing but sit back and profit from the labor of their subordinates.

I'd like to see your source on that figure. There is a high percentage of business failures (a majority in fact), particularly in the first year or two, but I do not believe it is quite that high.

As to hiring others to work for you, do you have a problem with the idea of informed consent? If they offer me X to do a particular job, it is my choice as to whether that's worth it to me or not. You make it sound as though all business owners are "buckra" getting their slavies to do everything while they polish their watch fob. I just dont' see it....

[Beskar]

As to hiring others to work for you, do you have a problem with the idea of informed consent? If they offer me X to do a particular job, it is my choice as to whether that's worth it to me or not. You make it sound as though all business owners are "buckra" getting their slavies to do everything while they polish their watch fob. I just dont' see it....

I believe there is the perfect explanation to help you understand jabarto's points.

[Ironside]

I suppose this is a bad time to propose a "everything is income; no deductions; eliminate separate taxes for SS & Medicare, and bin the IRS" national flat tax of 13%? Some 'experts' claim such funding would easily pay for SocSec, Nat'l Health Care for 50 years, and elimination of national debt in 5.

Doesn't that end up equal to a budget of 13% of the total GDP? A 13% tax raise would surely do it, a total of 13% barely pays the defense and treasury department (not sure what they do with the money, the interest is much smaller).

And without a health care reform and current growth, that's the equal to the public part of the healthcare expenses in a decade or two.

[Crazed Rabbit]

CR - still standing up for the big man I see. ;x

I'm standing up for the 50%+ of Americans who have stock and would be hurt by an increase in the capital gains tax just because Jabarto despises rich people.

You know how those people get rich? It's not because they make brilliant management decisions. They get there by hiring the best workers from college to do all that for them. The owners literally do nothing but sit back and profit from the labor of their subordinates.

Wow. Do you really believe that? How can you believe that?

I would really hesitate to say that a trust-fund brat like Paris Hilton is of the same value and economic promise as somebody who starts their own business.

How do you think people get loans from banks to start businesses? That's not to say Paris Hilton is of the same value, but the banks have to get money from somewhere.

CR

[jabarto]

I'm standing up for the 50%+ of Americans who have stock and would be hurt by an increase in the capital gains tax just because Jabarto despises rich people.

Thanks for strawmanning me. And are you seriously complaining about rich people being "hurt" by this?

"OH NO if we raise taxes on rich people they'll only make 1000x what other people do in a year instead of 10,000x GOD HELP US ALL".

Seriously. We could tax them at 95% (not that I advocate that) and they'd STILL have more disposable income than almost anyone.

Wow. Do you really believe that? How can you believe that?

I don't see any reason not to. We live in one of the most strongly capitalistic societies on Earth, after all. So why don't you enlighten me and offer your libertarian perspective on things? I'm sure it'll breed an interesting discussion (not kidding; I really want to hear your take on this).

Oh and I don't feel like multi-quuoting every post but to answer a few questions that have come up so far; I don't have sources on business failure rates off hand but I'll see what I can find. And I should point out that I'm not against people being rewarded for their merit. I'm saying merit doesn't justify ownership of another's labor.

[Centurion1]

Oh and I don't feel like multi-quuoting every post but to answer a few questions that have come up so far; I don't have sources on business failure rates off hand but I'll see what I can find. And I should point out that I'm not against people being rewarded for their merit. I'm saying merit doesn't justify ownership of another's labor.

thent hey can quit and get a new job. how do you propose we nip this ownership of labor idea in the bud.

perhaps a new form of business where everyone makes the same money and all decisions are a vote from the janitor to the CEO.

Yeah that will really improve innovation and harness human nature.

[jabarto]

thent hey can quit and get a new job. how do you propose we nip this ownership of labor idea in the bud.

Ah yes. The classical libertarian response.

"Well they can just take their business elsewhere!" *ignores all geographical and socio-economic factors that could inhibit this*

perhaps a new form of business where everyone makes the same money and all decisions are a vote from the janitor to the CEO.

Or maybe we could have a democratized workplace where people are actually paid the money they're worth with the more demanding jobs still being well compensated?

what you described isn't how socialism works btw

Yeah that will really improve innovation and harness human nature.

The myth that capitalism and privatization feuls innovation is a lie of cosmic proportions.

[Centurion1]

Or maybe we could have a democratized workplace where people are actually paid the money they're worth with the more demanding jobs still being well compensated?

what you described isn't how socialism works btw


The myth that capitalism and privatization feuls innovation is a lie of cosmic proportions.

your right it is more like communism. people are paid the money there jobs are worth sorry but cleaning my toilets isn't worth 100k. serving me burgers isnt worth 100k either. Running a lasrge company is worth quite a bit of money in most cases however.

And yes capitalism does harness human nature. otherwise it would never ever work. what does it harness then?

[Aemilius Paulus]

Thanks for strawmanning me. And are you seriously complaining about rich people being "hurt" by this?

"OH NO if we raise taxes on rich people they'll only make 1000x what other people do in a year instead of 10,000x GOD HELP US ALL".

Seriously. We could tax them at 95% (not that I advocate that) and they'd STILL have more disposable income than almost anyone.

I wish this was true, but it is not quite that simple. In fact, it is not that simple at all. It is true that the wealthy have so much money it should not matter to them much. The thing is, though, no-one sits on piles of gold. All of the money is in circulation, invested into all sorts of things. I doubt if Warren Buffet has as little as $150,000 on his checking account. If you tax the money of the rich, you will not merely target assets lying around. No, the wealthy have their own role, and a very important one. You tax them too much, and the economy tanks.

Not to mention, while the personal income tax in US is ridiculously low by world standards, the corporate tax rates are among the highest. ALL taxes carry over. You tax one person, and he will skin the money from the next one. Tax the companies, and prices rise, business falls, and all sorts of after-effects follow. Now, US is such a lucrative market that no company can afford to overlook it and let their competitor grow fat. Which is why in part US gets away with such high corporate tax.

I don't see any reason not to. We live in one of the most strongly capitalistic societies on Earth, after all.

US can do plenty of things to improve itself, including raising the personal income tax a bit, but taxing the wealthy that much can easily backfire. I am a Democrat, but...

And yes capitalism does harness human nature. otherwise it would never ever work. what does it harness then?

*nervous chuckle* I would not advertise that too much... I am not crazy liberal, but neither am I partial to going into GOP fantasies...

[jabarto]

I wish this was true, but it is not quite that simple. In fact, it is not that simple at all. It is true that the wealthy have so much money it should not matter to them much. The thing is, though, no-one sits on piles of gold. All of the money is in circulation, invested into all sorts of things. I doubt if Warren Buffet has as little as $150,000 on his checking account. If you tax the money of the rich, you will not merely target assets lying around. No, the wealthy have their own role, and a very important one. You tax them too much, and the economy tanks.

Not to mention, while the personal income tax in US is ridiculously low by world standards, the corporate tax rates are among the highest. ALL taxes carry over. You tax one person, and he will skin the money from the next one. Tax the companies, and prices rise, business falls, and all sorts of after-effects follow. Now, US is such a lucrative market that no company can afford to overlook it and let their competitor grow fat. Which is why in part US gets away with such high corporate tax.

You're right, but we're talking about rates here. I'm not suggesting taxing his worth, but rather his income.

EDIT: Though I grant I said "disposable income" and was likely wrong about that...

US can do plenty of things to improve itself, including raising the personal income tax a bit, but taxing the wealthy that much can easily backfire. I am a Democrat, but...

Very well. I rescind my statement. Keep in mind, though, I was being rhetorical when I said that.