A budget proposal: towards a balanced budget and for the people - the Progressives

[child of wonder]

Did you mean to say "a higher percentage"?

No.

He means that everyone should pay X% of their income in taxes but at some point the total dollars you pay in is capped.

So if I make $50,000 per year and the flat tax is 10%, I pay $5,000 in taxes.

If Joe Blow makes $1,000,000, the flat tax is 10%, and the cap is $500,000 in income, he pays $50,000 in taxes. If the flat tax applied to Joe's entire income, my cousin claims "that's not fair."

 

[ElFenix]

"Creates new tax brackets that range from 45% starting at $1 million to 49% for $1 billion or more"

What a fucking joke...

Ok, so a millionaire pays 45% of his income to the Feds and another 8-9% to the state as well.

So you think it is okay for the government to now take over half of someone's income? Millionaires will no longer be working for themselves instead they will be working for the government.

uh, do you know how marginal tax rates work?

I think they have a germ of one good idea. I think a case can be made that capital gains, at least short term capital gains, should be taxed the same as earned income as a matter of basic fairness.

short term gains are taxed at the regular rates.

 

[hal2kilo]

uh, do you know how marginal tax rates work?

So far the Prof never has. I suspect he's playing dumb because it doesn't fit with his agenda.

 

[Fern]

Originally Posted by Craig234
YThe numbers for the country, in everything from debt to concentration of wealth and more, really took a wrong turn with Reagan that it's still on. Before him - from FDR to Carter - the rates were higher. The country did just fine - plenty of 'rich people', economic growth, a strong middle class, anti-poverty programs, a man on the moon for fun.

During the FDR to Carter years there were 8,000 different tax breaks that allowed people to write everything off.

NO ONE paid the 90% income tax rate under FDR just as NO ONE paid the 70% rate under Carter.

In 1980 the top 1% had a total tax rate of 34.6%
In 2000 the top 1% had a total tax rate of 33%
In 2006 the top 1% had a total tax rate of 31.3%

Rates for the top 5%
1980 30%
2000 31%
2006 29.1%

Total tax rate for ALL incomes
1980 19%
2000 20.9%
2006 20.7%

So even though current tax rates are MUCH lower than in 1980 Americans are sending more of their money to the government than ever before? (pre-recession)
Data for 1979-2005
http://www.econdataus.com/efftax05.html

Exactly.

Why Progressives/Liberal/Dems cannot, or refuse, to grasp this is more than annoying.

Back then we had high rates and all types of silly deductions.

Reagan eliminated the silly deductions and lowered the rate so people basically paid the same amount of tax. The tax code was hugely simplified.

Screaming about "rates" but ignoring the other side of the equation (deductions) is very disingenuoius.

Fern

 

[ProfJohn]

While that isn't about the budget, I agree with spending a lot on EVERYTHING.

FTFY

 

[Craig234]

I'll explain how it helps the economy. Cutting taxes:

I earn $1000 per month. If i get taxed 20%, i come out net 800 for myself. my rent is $300 / month. Gas is $200 / month. I now have $300 "disposable income"

if we were to lower taxes, your disposable income would increase and you could have more money to spend in the economy. the problem is now people don't have any disposible income and only buy what they need and hang on to the rest for a rainy day.

cutting spending in the government reduces the necesity to collect 50% of the hardworking americans income and give 50% of that to the poor and then keep the rest for themselves

That is how it works, for $1000 per month. Note that amount isn't targeted for more taxes.

That's *not* how it works for incomes over $1 million per year.

At that level, they're saying, 'cut my taxes and shift the tax burden onto the bottom 99.9% of Americans, so I can keep more income to own more of America's assets.'

That's why under Reagan, as this 'cut the taxes of the rich' approach began, the top 1% saw their incomes go up 80% while the average for others was 3% (total, not per year).

The same trends have continued; since then the top 0.1% have gone many hundreds of percent, the rest of the top 20% up a little, the bottom 80% got nothing after inflation.

 

[Fern]

You do understand that $1.7T of cuts + $1.7T of "public investments" = 0, right? The plan is "tax $4T"

Haha. Exactly.

Fern

 

[Craig234]

Exactly.

Why Progressives/Liberal/Dems cannot, or refuse, to grasp this is more than annoying.

Back then we had high rates and all types of silly deductions.

Reagan eliminated the silly deductions and lowered the rate so people basically paid the same amount of tax. The tax code was hugely simplified.

Fern

Oh, is that all he did? Why, that isn't so bad. What an accurate and honest description.

Now, explain how your explanation explains this fact:

You DID explain why the income was so extremely shifted to the top.

Let me re-read your post, it's in there?

 

[Craig234]

Haha. Exactly.

Fern

Yes? The plan is improve how we spend $1.7T, and tax $4T *from those who have seen their taxes slashed, and had incredible increases in THEIR wealth*.

If we tax them $4T more over the next decade - how much have the same wealthier people seen their their wealth increase as they've taken all economic growth for 30 years?

 

[Fern]

Oh, is that all he did? Why, that isn't so bad. What an accurate and honest description.

Now, explain how your explanation explains this fact:

You DID explain why the income was so extremely shifted to the top.

Let me re-read your post, it's in there?

WTH does that chart have to do with income taxes, particularly the rates and deductions? (I already know the answer is absolutely nothing).

What changed between 1980 and 1990? Some huge things:

1. The retail-ization of the stock market etc,. When the stock market went retail we saw the rise of some people on Wall Street making fantastic amounts of money. I remember being back in collge in the early 1980's and a seat on the stock exchamge could be had for $100k. What do you think they're worth now?

2. Cable TV. Look at what prof. athletes made back in 1980 vs 1990. All kinds of new people in the entertainment business began making huge $'s. Many thousands of new millionaires were created by the vastly increased demand for content.

3. Corporate expansion, consolidation and globalization. E.g., it was between 1980 and 1990 that Disney moved into the European market (they didn't open till 1992 though). Compact and other PC makers were doing the same. You get bigger companies, you get higher exec pay because their responsibilities have exponentially increased

4. Tech boom was underway by the mid 80's, by then PCs were being issued to employees and (employee) production took off.

There's a pot load of valid reasons.

Fern

 

[ProfJohn]

So far the Prof never has. I suspect he's playing dumb because it doesn't fit with his agenda.

I know exactly how they work. But the math is to complicated to figure out so I used rounded figures.

For a millionaire the first $1 million is taxed at rates from 10% up to 39.5% (the Clinton rate which they want to return too)
The second million would be taxed at 45% PLUS they would have to pay 6.2% in SS taxes on that which they don't now due to the SS cap and 2% Medicare tax

So your second million dollars is taxed at 53% and that is just Federal taxes.

Now say you live in NYC.
The state income for income over $500,000 is 9%.
NYC also has personal incomes taxes at a rate of 3.6% for everything over $90,000

So the second million you make will be taxed at a combined rate of 65%
Seriously, do the math yourself.

Once you hit a million 2 out of every 3 dollars you make will go to the government. You think that will create an incentive to not work? Or perhaps to find ways of hiding income? Or moving to some place with less taxes?

And if you are a billionaire your effective tax rate on income over $1 billion would be 69%

And if you don't think I know what I am talking about then do the math yourself.

 

[Fern]

Yes? The plan is improve how we spend $1.7T, and tax $4T *from those who have seen their taxes slashed, and had incredible increases in THEIR wealth*.

If we tax them $4T more over the next decade - how much have the same wealthier people seen their their wealth increase as they've taken all economic growth for 30 years?

Just 2 comments:

1. I assuming the "improved" spending means cutting the defense buget by 25% and reallocating that. Good luck with that. And if it aint all coming out of defense I'd really like to hear where they think they'll cut it from.

2. I gaurandamntee you we'll never see the $4T in increased revenue. To a very large extent the timing of when captial gains are taxed is in the hands of the investor. They simply won't sell and pay a huge tax. They'll hold on and wait until rates fall back down. The timing of paying tax on cap gains is the easiest thing in the world to manipulate.

Edit: Uh Oh, a liitle looking and I can that Craig234 snuck some cherry picked into the discussion. 1979 (and thereabouts) looks to be an outlier for wealth concentration data.

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Historical context
Numerous studies show that the wealth distribution has been extremely concentrated throughout American history, with the top 1% already owning 40-50% in large port cities like Boston, New York, and Charleston in the 19th century. It was very stable over the course of the 20th century, although there were small declines in the aftermath of the New Deal and World II, when most people were working and could save a little money. There were progressive income tax rates, too, which took some money from the rich to help with government services.

Then there was a further decline, or flattening, in the 1970s, but this time in good part due to a fall in stock prices, meaning that the rich lost some of the value in their stocks. By the late 1980s, however, the wealth distribution was almost as concentrated as it had been in 1929, when the top 1% had 44.2% of all wealth. It has continued to edge up since that time, with a slight decline from 1998 to 2001, before the economy crashed in the late 2000s and little people got pushed down again. Table 3 and Figure 5 present the details from 1922 through 2007.

Shame on you Craig234.

Fern

 

[Craig234]

WTH does that chart have to do with income taxes, particularly the rates and deductions? (I already know the answer is absolutely nothing).

What changed between 1980 ans 1990? Some huge things:

1. The retail-ization of the stock market etc,. When the stock market went retail we saw the rise of some people on Wall Street making fantastic amounts of money. I remember being back in collge in the early 1980's and a seat on the stock exchamge could be had for $100k. What do you think they're worth now?

2. Cable TV. Look at what prof. athletes made back in 1980 vs 1990. All kinds of new people in the entertainment business began making huge $'s. Many thousands of new millionaires were created by the vastly increased demand for content.

3. Corporate expansion, consolidation and globalization. E.g., it was between 1980 and 1990 that Disney moved into the European market (they didn't open till 1992 though). Compact and other PC makers were doing the same. You get bigger companies, you get higher exec pay because their responsibilities have exponentially increased

4. Tech boom was underway by the mid 80's, by then PCs were being issued to employees and (employee) production took off.

There's a pot load of valid reasons.

Fern

Bottom line, the rich saw their income skyrocket while everyone else was flat (3% total over 8 years before inflation, slightly negative adjusted for inflation) - while taxes were CUT for those at the top with this right-wing propaganda about 'trickle down economics' saying everyone would benefit by cutting taxes on the rich, which is false - the opposite happens.

You talk about corporate CEOs' pay increasing *simply because they were more productive*. This is a very false explanation why their pay shot up.

In 1980, CEOs made 42 times the average worker. Today, it's 343 times. That's not productivity.

CNN's story recently said it well:

'From 2009 to 2010, compensation went up 23% for CEO's at the largest 200 corporations. There are several reasons for this. Performance is not one of them.'

You say 'production took off'. There's a lot of truth to that - the US economy has doubled in size during this period as a result.

That's why it's a problem instead of everyone sharing in that growth, *the bottom 80% have gotten basically none of that growth in 30 years after inflation*.

So, the economy doubles, 80% get nothing, the top 1% get 80% of that doubling.

And you sit here whining about the people who got all that paying more taxes.

 

[Craig234]

Just 2 comments:

1. I assuming the "improved" spending means cutting the defense buget by 25% and reallocating that. Good luck with that. And if it aint all coming out of defense I'd really like to hear where they think they'll cut it from.

If you're 'really like to see where', read the budget.

2. I gaurandamntee you we'll never see the $4T in increased revenue. To a very large extent the timing of when captial gains are taxed is in the hands of the investor. They simply won't sell and pay a huge tax. They'll hold on and wait until rates fall back down. The timing of paying tax on cap gains is the easiest thing in the world to manipulate.

Fern

Not if there's the new rate for an extended period - many/most will realize gains. Back when short-term gains were taxed at a far higher rate, many still paid it.

That's all you have to say about the huge problem of income distribution in the chart?

Pathetic. Why bother posting, if you are just going to ignore the facts.

 

[ProfJohn]

Yes? The plan is improve how we spend $1.7T, and tax $4T *from those who have seen their taxes slashed, and had incredible increases in THEIR wealth*.

If we tax them $4T more over the next decade - how much have the same wealthier people seen their their wealth increase as they've taken all economic growth for 30 years?

Craig proves his idiocy again...

Notice the red line during the 80s....
Now notice the red line during the 90s....

What was the FIRST thing Clinton did when he took office?

He RAISED tax rates on the rich!! And yet their share of income went through the roof afterwards???

Maybe there is something else at play here besides tax rates... :hmm:

 

[blackangst1]

No.

He means that everyone should pay X% of their income in taxes but at some point the total dollars you pay in is capped.

So if I make $50,000 per year and the flat tax is 10%, I pay $5,000 in taxes.

If Joe Blow makes $1,000,000, the flat tax is 10%, and the cap is $500,000 in income, he pays $50,000 in taxes. If the flat tax applied to Joe's entire income, my cousin claims "that's not fair."

I see. I personally dont have a problem with a flat tax with no caps.

 

[Fern]

-snip-
That's all you have to say about the huge problem of income distribution in the chart?

See my edit above.

You chery picked to distort the truth. Wealth concentration is pretty much the same as always, actually a bit less.

Fern

 

[Darwin333]

Complete nonsense. Of course they can tax those who have had their taxes slashed greatly increasing their income - and no, it doesn't cost jobs.

Stay a bit informed - tax cuts for the rich create few jobs and cause a lot more problems than they help. Jobs are created with money in other places, like consumers' hands.

You buy into the right-wing propaganda of 'job creators needs tax cuts', eh? That's gone well.

You do realize that we have historically never been able to extract more than 20% of GDP from the economy in Federal revenue over an extended period of time regardless of the actual rates, right?

 

[Craig234]

You do realize that we have historically never been able to extract more than 20% of GDP from the economy in Federal revenue over an extended period of time regardless of the actual rates, right?

I can defer the question of what can be done on that by noting that regardless, shifting the taxation to a more appropriate, helpful, fair distribution alone justifies the policy change.

 

[ElFenix]

i just had a thought: CEOs' exorbitant salaries are mostly stolen from the wealthy anyway as it's really shareholder value the CEOs are eating up.

 

[Darwin333]

uh, do you know how marginal tax rates work?

Shrug, that puts him on par with the head of the IRS.

 

[Darwin333]

I can defer the question of what can be done on that by noting that regardless, shifting the taxation to a more appropriate, helpful, fair distribution alone justifies the policy change.

but then the "progressive budget" still fails at being balanced, it simply shifts existing revenue.

Don't get me wrong, it could still raise some revenue just not the amount they are claiming. This is rather common knowledge so I must assume that they either know this or they are absurdly incompetent and they shouldn't be anywhere near the budget writing process. My bet is on the former which means they are still planning on growing debt faster than GDP. The law of exponents FTL.

 

[ProfJohn]

I am quoting PJ, but can someone help answer a question? If raising taxes by $1T would wreck the economy, why would cutting spending by $3T, $2T, or $1T not also wreck the economy?

And if you listen to Boehner and Cantor, cutting the spending would actually boost economic growth and create jobs.

How does that work?

1. That $1 trillion is raised by taxing capital gains which means we are taking money out of investments in our economy.

By taxing capital gains as income we would be jacking the tax rate from 15% up to 39% for people making over $150ish in income. That would give us close to the highest rate in the world.

Also, by increasing the capital gains tax rate you are taking away the incentive for people to invest in new businesses.

2. All money the government spends has to come from the people first. In order to spend $4 trillion you have to take that $4 trillion from the American people first via taxes (or you borrow and pay it back by taking it via taxes later)

When you increases taxes by $1 trillion that is a trillion dollars that the American people can spend on themselves.

When you cut spending by $1 trillion that is a trillion dollars you are returning to the American people for them to spend. $1 trillion less spending = $1 trillion less taxes.

But it is a little more complicated than that due to borrowing and the costs of borrowing and the benefits of government spending etc etc etc. Let's just say that raising taxes by $1 trillion would be much worse for the economy than cutting spending by $1 trillion.

 

[child of wonder]

I see. I personally dont have a problem with a flat tax with no caps.

Neither do I. A flat tax with no deductions or loopholes would be great. Cut the hell out of the IRS and now people can't find sneaky ways to avoid taxes.

My cousin is a smart man but a flat tax with a cap is just stupid.

 

[Craig234]

Edit: Uh Oh, a liitle looking and I can that Craig234 snuck some cherry picked into the discussion. 1979 (and thereabouts) looks to be an outlier for wealth concentration data.

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html



Shame on you Craig234.

Fern

You're a liar, Fern. Not the sort of 'lie' you make false attacks about and lack the integrity to acknowledge when they're pointed out. The lie kind.

There's nothing 'cherry picked' there. In a graph *which has data for each year*, the worst a 'cherry picked year' like 1979 could do is put one outlier data point on the chart.

You don't even understand how 'cherry picking' data works.

Saying 'the overall change from 1979 to now is X' could be 'cherry picking' if 1979 is an outlier. Saying 'here's a chart of each year since 1979' is not.

Here's another chart you won't respond to, as you continue to dodge the facts, going back well before 1979 - showing it as a turning point with the election of Reagan.

And giving the lie to your claim "Wealth concentration is pretty much the same as always, actually a bit less."