"Fair Share"

[Fern]

Originally posted by: BoberFett
As I already pointed out, income tax brackets adjust for inflation already.

🙂 That's got nothing to do with the concept I illustrated above. (See %150K gain vs $75K)

It's to prevent "bracket creep".

Fern

 

[First]

Originally posted by: CADsortaGUY

You only want to limit it to "financial definitions"? :roll: Ofcourse those definitions will include rates because that's what most people think and parrot since it's what they learned in school.

ROFL. Post of the friggin year. :laugh:

 

[Bowfinger]

Originally posted by: Fern
Interest income is taxed annually, and the tax paid on it only after it is received.

Umm, taxes are paid on capital gains only after they are realized, i.e., received, as well. They are no different from interest in that respect.

The concept of inflation is irrelevant.

Inflation becomes a more serious concern, and significantly larger %, the longer the time period.

Fern

No, it really works out the same. It's just more obvious with long-term investments since you see the impact all at once. Cumulatively over the same period of time, the inflation "loss" on interest will be similar to that of longer-term investments.

I think one could make the case that ordinary savings account interest shouldn't be taxed at all given today's interest and inflation rates. At the end of the year, the amount of money one has in inflation-adjusted dollars actually drops. The interest paid will be less than the lost value due to inflation. Nonetheless, in spite of the loss, the taxpayer is taxed on the interest as if it represents income. I think it's reasonable to discuss adjusting capital gains income for inflation, but only if we apply the same consideration to other sources of income.

 

[yllus]

Originally posted by: Evan Lieb

Originally posted by: CADsortaGUY

You only want to limit it to "financial definitions"? :roll: Ofcourse those definitions will include rates because that's what most people think and parrot since it's what they learned in school.

ROFL. Post of the friggin year. :laugh:

CADsortaGUY, dude, you should have bailed on this thread way before it got to this embarassing level. 😛

 

[jackace]

Originally posted by: Fern

Originally posted by: jackace

Originally posted by: Fern

Originally posted by: Bowfinger
-snip-
I would suggest, however, that simply taxing capital gains at the same rate as earned income would help tremendously.

Insane, unless you also advocate adjusting for inflation, for the reason I posted above.

Fern

What do you mean by adjusting for inflation?

If you an asset for a long time, as many do, at lot of it's increase in value is due to inflation.

Let's say you have asset X, purchased 20 years ago for $100,000 and sell it this year for $250,000, your gain would really only be about $75K (instead of $150K) if you adjust for inflation.

Link

(If you input $100K from 1988 to 2008 in the above calculator you'll get the $175K amount)

I used the CPI as the measure of inflation.

Edit: For countries that adjust LT cap gains for inflation (IIRC Israel for example) you would show that you paid $175K for the asset (instead of only $100K), thus your taxable gain would be $75K and not $150K as we do here in the US. However, those countries that adjust for inflation offer no special rate for LT cap gains.

Fern

Lets assume another person invests in an asset that over 20 years doesn't change in value. In 20 years that 100k is still worth only 100k. That person actually lost money because of inflation. Why does the person in your example get to make 75k tax free because their investment made money?

 

[Engineer]

Originally posted by: Evan Lieb

Originally posted by: CADsortaGUY

You only want to limit it to "financial definitions"? :roll: Ofcourse those definitions will include rates because that's what most people think and parrot since it's what they learned in school.

ROFL. Post of the friggin year. :laugh:

LOL!

 

[Fern]

Originally posted by: jackace

Originally posted by: Fern

Originally posted by: jackace

Originally posted by: Fern

Originally posted by: Bowfinger
-snip-
I would suggest, however, that simply taxing capital gains at the same rate as earned income would help tremendously.

Insane, unless you also advocate adjusting for inflation, for the reason I posted above.

Fern

What do you mean by adjusting for inflation?

If you an asset for a long time, as many do, at lot of it's increase in value is due to inflation.

Let's say you have asset X, purchased 20 years ago for $100,000 and sell it this year for $250,000, your gain would really only be about $75K (instead of $150K) if you adjust for inflation.

Link

(If you input $100K from 1988 to 2008 in the above calculator you'll get the $175K amount)

I used the CPI as the measure of inflation.

Edit: For countries that adjust LT cap gains for inflation (IIRC Israel for example) you would show that you paid $175K for the asset (instead of only $100K), thus your taxable gain would be $75K and not $150K as we do here in the US. However, those countries that adjust for inflation offer no special rate for LT cap gains.

Fern

Lets assume another person invests in an asset that over 20 years doesn't change in value. In 20 years that 100k is still worth only 100k. That person actually lost money because of inflation. Why does the person in your example get to make 75k tax free because their investment made money?

Yes, they lost money.

And if they were in a tax system adjusting for inflation, like the other person, they would have a $75K cap loss to deduct.

Fern

 

[CADsortaGUY]

Originally posted by: yllus

Originally posted by: Evan Lieb

Originally posted by: CADsortaGUY

You only want to limit it to "financial definitions"? :roll: Ofcourse those definitions will include rates because that's what most people think and parrot since it's what they learned in school.

ROFL. Post of the friggin year. :laugh:

CADsortaGUY, dude, you should have bailed on this thread way before it got to this embarassing level. 😛

No, there is no embarrassment. I was not talking about RATE - which "progressive taxation" is about. "progressive" however is much broader than just "progressive taxation"(meaning incremental rates). The problem is people here only view things in their own little narrow scope and don't seem to be able to thing in broader terms. They just let their knee jerk and then stick with it. I "bailed" on this thread because people hijacked it and want to play the same old BS game of "rate" when that clearly wasn't what I was discussing - nor was the link in the OP talking about it.

I've pretty much just laughed at the people who've continued with the BS. They think they "got" something but they haven't a clue due to their own narrow mindedness. I can't blame them too much though - it's how they were taught to think it seems.

 

[fskimospy]

Originally posted by: CADsortaGUY

No, there is no embarrassment. I was not talking about RATE - which "progressive taxation" is about. "progressive" however is much broader than just "progressive taxation"(meaning incremental rates). The problem is people here only view things in their own little narrow scope and don't seem to be able to thing in broader terms. They just let their knee jerk and then stick with it. I "bailed" on this thread because people hijacked it and want to play the same old BS game of "rate" when that clearly wasn't what I was discussing - nor was the link in the OP talking about it.

I've pretty much just laughed at the people who've continued with the BS. They think they "got" something but they haven't a clue due to their own narrow mindedness. I can't blame them too much though - it's how they were taught to think it seems.

First rule when you find yourself in a hole: Stop digging.

 

[jackace]

Originally posted by: Fern

Originally posted by: jackace

Originally posted by: Fern

Originally posted by: jackace

Originally posted by: Fern

Originally posted by: Bowfinger
-snip-
I would suggest, however, that simply taxing capital gains at the same rate as earned income would help tremendously.

Insane, unless you also advocate adjusting for inflation, for the reason I posted above.

Fern

What do you mean by adjusting for inflation?

If you an asset for a long time, as many do, at lot of it's increase in value is due to inflation.

Let's say you have asset X, purchased 20 years ago for $100,000 and sell it this year for $250,000, your gain would really only be about $75K (instead of $150K) if you adjust for inflation.

Link

(If you input $100K from 1988 to 2008 in the above calculator you'll get the $175K amount)

I used the CPI as the measure of inflation.

Edit: For countries that adjust LT cap gains for inflation (IIRC Israel for example) you would show that you paid $175K for the asset (instead of only $100K), thus your taxable gain would be $75K and not $150K as we do here in the US. However, those countries that adjust for inflation offer no special rate for LT cap gains.

Fern

Lets assume another person invests in an asset that over 20 years doesn't change in value. In 20 years that 100k is still worth only 100k. That person actually lost money because of inflation. Why does the person in your example get to make 75k tax free because their investment made money?

Yes, they lost money.

And if they were in a tax system adjusting for inflation, like the other person, they would have a $75K cap loss to deduct.

Fern

Thats exactly what I thought you meant by "adjusting for inflation" just making sure I understood you correct. Thank you

As far using that system it seems less complicated and easier IMO to adjust the rate of capital gains tax to reach the desired level of taxation.

 

[BoberFett]

Originally posted by: Fern

Originally posted by: BoberFett
As I already pointed out, income tax brackets adjust for inflation already.

🙂 That's got nothing to do with the concept I illustrated above. (See %150K gain vs $75K)

It's to prevent "bracket creep".

Fern

Except that having $100,000 at the beginning and the end means you earned $0 each year, liquidated $0 each year, and paid $0 in taxes each year.

Why should you be able to write off a bad investment? If you bury your money in a coffee can and dig out 30 years later, why should the rest of us taxpayers care that you lost money on it? Learn to make good investments.

 

[shira]

Originally posted by: Rainsford

Originally posted by: CADsortaGUY

Originally posted by: Rainsford

Originally posted by: Engineer
...
Just because they are paying more of the burden of total taxation does not mean they are paying a higher rate (and they probably aren't).
...

That's what made my BS detector light up. The author of this article probably isn't a moron, and those numbers are obvious to prove or disprove the point...so why weren't they offered?

Except that was never the claim. No one said they were paying a higher RATE, but their share of the burden is bigger - which is exactly what you libs keep trying to do - soak the "rich". You should be cheering this data as the rich's share of the burden is getting bigger.

That's almost what you said, but not quite. "More progressive" (which was the claim) implies that the rich pay a greater percentage of their income in taxes than they used to. The fact that their share of the tax burden went up doesn't mean anything if their share of the total income went up even more. Their effective tax rate could have actually DROPPED in that situation, which wouldn't quite support your point very well.

What CSG means when he claims the system is "more progressive" is that the percentage of the aggregate income tax has decreased for the poor and increased for the rich. He doesn't care if the percentage of aggregate income taken in by the the rich has increased far, far more than their increase in tax.

To demonstrate the absurdity of his claim, let's suppose there are exactly two earners/taxpayers in the U.S.: Mr. Rich and Mr Poor.

Year A:
Mr Poor earns $10,000. Mr Rich earns $10,000,000.
Mr Poor pays $1000 in taxes. Mr Rich pays $2,000,000 taxes.

Year B:
Mr Poor earns $9000. Mr Rich earns $30,000,000.
Mr poor pays $800 in taxes. Mr Rich pays 2,000,200 in taxes.

CSG would claim this would be an example of increased progressivity, since Mr. Rich's percentage of the total of all taxes paid has increased. The fact that, in this example, the effective income tax rate paid by Mr. Rich is actually LOWER than that paid by Mr Poor is irrelevant, in CSG's eyes.

And this example isn't far from reality: As a group, the effective tax rate (factoring together income tax, capital gains taxes, and taxes on Qualified dividends) of the rich has gone down much more than it has for the middle-class and poor.

For a rich person who gets almost all of his income through capital gains and dividends, the effective tax rate would be about 15%; a typical middle-class wage earner pays an effective tax rate of about 20%.

 

[fskimospy]

Originally posted by: shira

What CSG means when he claims the system is "more progressive" is that the percentage of the aggregate income tax has decreased for the poor and increased for the rich. He doesn't care if the percentage of aggregate income taken in by the the rich has increased far, far more than their increase in tax.

To demonstrate the absurdity of his claim, let's suppose there are exactly two earners/taxpayers in the U.S.: Mr. Rich and Mr Poor.

Year A:
Mr Poor earns $10,000. Mr Rich earns $10,000,000.
Mr Poor pays $1000 in taxes. Mr Rich pays $2,000,000 taxes.

Year B:
Mr Poor earns $9000. Mr Rich earns $30,000,000.
Mr poor pays $800 in taxes. Mr Rich pays 2,000,200 in taxes.

CSG would claim this would be an example of increased progressivity, since Mr. Rich's percentage of the total of all taxes paid has increased. The fact that, in this example, the effective income tax rate paid by Mr. Rich is actually LOWER than that paid by Mr Poor is irrelevant, in CSG's eyes.

And this example isn't far from reality: As a group, the effective tax rate (factoring together income tax, capital gains taxes, and taxes on Qualified dividends) of the rich has gone down much more than it has for the middle-class and poor.

For a rich person who gets almost all of his income through capital gains and dividends, the effective tax rate would be about 15%; a typical middle-class wage earner pays an effective tax rate of about 20%.

Of course it's an absurdity, that's why the real definition of progressive taxation is based upon rates instead of magical moon logic, red balloons, purple horseshoes, or whatever other thing CAD cooks up to try and avoid admitting he was wrong. The only thing that has kept this thread going so long is CAD's dogged refusal to admit defeat even in the face of overwhelming evidence.

Not that I'm shocked or anything.

 

[shira]

Originally posted by: CADsortaGUY
So since those who earn over 10mill pay less effective rate(still not what the OP was about...not that it matters around here I guess) it isn't progressive? Is BHO only going to raise taxes on those over 10 mill? How do you suppose he'll do that? No matter what he does won't affect this "problem" due to those at the bottom of those "brackets"(no matter where you put them) pay a higher effective rate than those at the top of the same "bracket".

Your burden in this argument isn't just to show that the current system is progressive. No, you made the claim that it's MORE progressive than it was before.

I'd venture to guess that if we found a chart like Bowfinger's for the year 1999, we'd see that the average effective tax rates for the highest brackets have fallen (from 1999 to now) much more than for the lower and middle brackets.

By any mainstream concept of what "progressive" means, the current system is significantly LESS progressive than it was pre-Bush.

 

[shira]

Originally posted by: CADsortaGUY

Originally posted by: yllus

Originally posted by: Evan Lieb

Originally posted by: CADsortaGUY

You only want to limit it to "financial definitions"? :roll: Ofcourse those definitions will include rates because that's what most people think and parrot since it's what they learned in school.

ROFL. Post of the friggin year. :laugh:

CADsortaGUY, dude, you should have bailed on this thread way before it got to this embarassing level. 😛

No, there is no embarrassment. I was not talking about RATE - which "progressive taxation" is about."progressive" however is much broader than just "progressive taxation"(meaning incremental rates). The problem is people here only view things in their own little narrow scope and don't seem to be able to thing in broader terms. They just let their knee jerk and then stick with it. I "bailed" on this thread because people hijacked it and want to play the same old BS game of "rate" when that clearly wasn't what I was discussing - nor was the link in the OP talking about it.

So let's get this straight: You post a link to a WSJ article that purports to show how progressive the U.S. tax system is by showing taxes paid by various income bracket and makes the statement, "In other words, the tax code is already steeply progressive."

And YOU even admit that "RATE [is what] progressive taxation is about." But somehow you're taking that WSJ sentence, "the tax code is already steeply progressive" and you're concluding that the meaning of "progressive" as used in that sentence doesn't refer to "progressive taxation?" Have I got that right?

Let me state this again in easy-to-see form:

CSG: (links to WSJ article and tells us) "Seems our system is MORE "progressive" after Bush's taxcuts."

Linked WSJ article: "the tax code is already steeply progressive."

CSG: RATE [is what] "progressive taxation is about."

CSG's conclusion:"I was not talking about RATE."

Clearly, I'm a knee-jerk liberal. I'm searching, searching, searching for, and failing to find, a concept of "progressive" that involves "taxation" but isn't the same thing as "progressive taxation."

 

[CADsortaGUY]

Originally posted by: shira

Originally posted by: CADsortaGUY
So since those who earn over 10mill pay less effective rate(still not what the OP was about...not that it matters around here I guess) it isn't progressive? Is BHO only going to raise taxes on those over 10 mill? How do you suppose he'll do that? No matter what he does won't affect this "problem" due to those at the bottom of those "brackets"(no matter where you put them) pay a higher effective rate than those at the top of the same "bracket".

Your burden in this argument isn't just to show that the current system is progressive. No, you made the claim that it's MORE progressive than it was before.

I'd venture to guess that if we found a chart like Bowfinger's for the year 1999, we'd see that the average effective tax rates for the highest brackets have fallen (from 1999 to now) much more than for the lower and middle brackets.

By any mainstream concept of what "progressive" means, the current system is significantly LESS progressive than it was pre-Bush.

*yawn* same old knee jerking. It matters little to me that you and others don't understand what I've stated - you'll just continue to be stuck on the same stupid. meh....

 

[shira]

Originally posted by: CADsortaGUY

Originally posted by: shira

Originally posted by: CADsortaGUY
So since those who earn over 10mill pay less effective rate(still not what the OP was about...not that it matters around here I guess) it isn't progressive? Is BHO only going to raise taxes on those over 10 mill? How do you suppose he'll do that? No matter what he does won't affect this "problem" due to those at the bottom of those "brackets"(no matter where you put them) pay a higher effective rate than those at the top of the same "bracket".

Your burden in this argument isn't just to show that the current system is progressive. No, you made the claim that it's MORE progressive than it was before.

I'd venture to guess that if we found a chart like Bowfinger's for the year 1999, we'd see that the average effective tax rates for the highest brackets have fallen (from 1999 to now) much more than for the lower and middle brackets.

By any mainstream concept of what "progressive" means, the current system is significantly LESS progressive than it was pre-Bush.

*yawn* same old knee jerking. It matters little to me that you and others don't understand what I've stated - you'll just continue to be stuck on the same stupid. meh....

That didn't answer the question. Show use the "more" part. Prove it.

Let me guess:

Before: Top 1% gets 10% of the income and pays 20% of the taxes.
After: Top 1% gets 100% of the income (everyone else is bankrupt and unemployed) and pays 100% of the taxes.

You'd say the "after" is "more progressive."

 

[Bowfinger]

Originally posted by: CADsortaGUY
*yawn* same old knee jerking. It matters little to me that you and others don't understand what I've stated - you'll just continue to be stuck on the same stupid. meh....

We understand perfectly Cad. The sky in your world is green; we're all stuck on stupid for insisting that "green" refers to color. Down is up, black is white, wrong is right. Got it.

:laugh:

 

[Engineer]

A flat rate would have been "progressive" according to the definition that these people are still thowing around since the Bush cuts. Of course, it could be "regressive", but that's a pipe dream as everyone knows that the uppers never go down on income..(well, really, rarely! 😛 )