Mind Blowing Charts From Senate Income Inequality Hearing

[the DRIZZLE]

Total taxes are the real issue, and by that measure, American taxes are barely progressive at all from the middle to the top-

http://www.ctj.org/pdf/taxday2011.pdf

And low earners pay a surprising share of their income in total taxes-

http://www.cbpp.org/cms/index.cfm?fa=view&id=3505

Are tax rates regressive as we approach the truly wealthy realms? Obviously, because the bulk of their income is from capital gains, dividends, & carried interest, taxed at ~15%. in that rarefied atmosphere at the top, all other taxes shrink to insignificance as a % of income. Romney's taxes are a great example.

Extremely wealthy people have income options that middle class people don't, like borrowing money to live on against the value of their real estate, buying munis & other strategies, reducing taxable income to a pittance-

http://money.msn.com/tax-tips/post.aspx?post=0c36eab7-9059-4b35-ae0c-cdf96b39189a

What the tax code truly incentivizes is being rich, and there are plenty of other incentives wrt that, snivelling from the likes of Grover Norquist and Bill O'Reilly aside.

SS and Medicare taxes aren't taxes, they are payments for insurance programs. At least that's what the government says. The SS formulas have some redistribution built in so poor people will do fairly well from SS in the long run.

Since you agree with me about the truly wealthy and capital gains taxes being the problem can I assume that you oppose raising the top marginal rates on working people?

 

[fskimospy]

This boils down to significant philosophical differences between my government and yours. Can you elaborate on why you think it's the most effective regulatory tool?

Because it has a proven record of altering unwanted behavior without having to resort to more heavy-handed remedies.

It is really part and parcel to most regulatory schemes, even if it isn't always labeled as a tax. A perfect example of this would be cap and trade regulation on acid rain. The government (in effect) taxed the creation of acid rain causing pollutants, which in turn spurred industry to alter its behavior. Sure the government could have created a scheme in which it sent people to jail or sued companies who created these emissions, but a well implemented tax scheme achieved everyone's goals in a far more effective manner.

 

[fskimospy]

SS and Medicare taxes aren't taxes, they are payments for insurance programs. At least that's what the government says. The SS formulas have some redistribution built in so poor people will do fairly well from SS in the long run.

Since you agree with me about the truly wealthy and capital gains taxes being the problem can I assume that you oppose raising the top marginal rates on working people?

Well the IRS sure calls them taxes, what government agency doesn't call them taxes?

 

[the DRIZZLE]

Because it has a proven record of altering unwanted behavior without having to resort to more heavy-handed remedies.

It is really part and parcel to most regulatory schemes, even if it isn't always labeled as a tax. A perfect example of this would be cap and trade regulation on acid rain. The government (in effect) taxed the creation of acid rain causing pollutants, which in turn spurred industry to alter its behavior. Sure the government could have created a scheme in which it sent people to jail or sued companies who created these emissions, but a well implemented tax scheme achieved everyone's goals in a far more effective manner.

I don't object to Pigovian taxes on behavior that has real externalities. Pollution as you cited is one of the best examples. In fact a carbon tax would be superior to cap and trade and is favored by most micro economists. However, having a handful of Pigovain taxes to address specific behaviors that have externalities is not the same thing as the millions of deductions and social engineering in the tax code today. The deductions are arbitrary, hidden and are more often about favoring special interests rather then properly allocating costs for specific externalities.

I'm actually in the middle of a 50 page research paper about different renewable energy incentive systems so I'm pretty familiar with these issues.

 

[the DRIZZLE]

Well the IRS sure calls them taxes, what government agency doesn't call them taxes?

Some guy in a wheelchair called them insurance programs.

 

[Pens1566]

When you realize that the 1% are fighting tooth and nail to prevent losing $30 for every $1k in income over $250k, it really puts it into perspective.

 

[fskimospy]

Some guy in a wheelchair called them insurance programs.

Yes, they are social insurance programs paid for with taxes. Considering the government calls them 'payroll taxes', I'm pretty sure they consider them a tax.

 

[fskimospy]

I don't object to Pigovian taxes on behavior that has real externalities. Pollution as you cited is one of the best examples. In fact a carbon tax would be superior to cap and trade and is favored by most micro economists. However, having a handful of Pigovain taxes to address specific behaviors that have externalities is not the same thing as the millions of deductions and social engineering in the tax code today. The deductions are arbitrary, hidden and are more often about favoring special interests rather then properly allocating costs for specific externalities.

I'm actually in the middle of a 50 page research paper about different renewable energy incentive systems so I'm pretty familiar with these issues.

Well taxes aren't inherently good or bad, it's all in how they are used. It seems like you are saying that bad taxes are bad, which is a pretty uncontroversial opinion, haha. I also agree that our tax system has far too many special provisions in it, but getting rid of taxes as a form of regulation entirely is not the answer.

 

[the DRIZZLE]

Yes, they are social insurance programs paid for with taxes. Considering the government calls them 'payroll taxes', I'm pretty sure they consider them a tax.

IIRC they called them that because otherwise they couldn't legally collect them. Conceptually they really aren't taxes for those who benefit from the redistribution in the formulas. If a poor person pays $1 into SS for a promise of a future stream of payments that has a present value of $1.50 that's not really a tax.

 

[the DRIZZLE]

Well taxes aren't inherently good or bad, it's all in how they are used. It seems like you are saying that bad taxes are bad, which is a pretty uncontroversial opinion, haha. I also agree that our tax system has far too many special provisions in it, but getting rid of taxes as a form of regulation entirely is not the answer.

No, that's not what I was saying. My point is a bit nuanced so I should have been more clear. I said that I oppose using deductions to set policy but that I don't have a problem with special taxes to account for externalities. If CO2 is bad we should tax it, not give handouts to the solar and wind industry. If you want to know why I'll send you my paper at the end of the month.

 

[fskimospy]

IIRC they called them that because otherwise they couldn't legally collect them. Conceptually they really aren't taxes for those who benefit from the redistribution in the formulas. If a poor person pays $1 into SS for a promise of a future stream of payments that has a present value of $1.50 that's not really a tax.

There is no guarantee of such payments, and the payment of these taxes does not generate any financial obligation on the part of the government. They could cancel Social Security tomorrow if they wanted to and never pay another dime. (well, until the AARP ran them out of town)

A tax is a payment to a state that if you fail to do so is punishable by law. Sure some people gain greater benefits in the long run from such a scheme, but it is undeniably a tax. If you don't think it is, try refusing to pay it.

 

[fskimospy]

No, that's not what I was saying. My point is a bit nuanced so I should have been more clear. I said that I oppose using deductions to set policy but that I don't have a problem with special taxes to account for externalities. If CO2 is bad we should tax it, not give handouts to the solar and wind industry. If you want to know why I'll send you my paper at the end of the month.

I'd be interested to read it.

 

[the DRIZZLE]

There is no guarantee of such payments, and the payment of these taxes does not generate any financial obligation on the part of the government. They could cancel Social Security tomorrow if they wanted to and never pay another dime. (well, until the AARP ran them out of town)

That's why I said promised not guaranteed. There is an implied obligation but as you said the government could change the rules at any time.

A tax is a payment to a state that if you fail to do so is punishable by law. Sure some people gain greater benefits in the long run from such a scheme, but it is undeniably a tax. If you don't think it is, try refusing to pay it.

I'm sure you are right legally. However conceptually it is not a tax if you are poor. They expect to get that money back and then some so it is not truly a tax even thought is compulsory. It was originally sold as a mandatory insurance/retirement program and it still serves that function in addition to redistributing wealth from the middle class to the poor.

It's not uncommon for payments and obligations to be reclassified from their legal/accounting definitions during economic and financial analysis.

 

[monovillage]

Here in California they call them all sorts of things besides "taxes" The government calls them fees,assessments, surcharges .....etc.

 

[monovillage]

First it's argued that taxes aren't heavy handed, then it's said try not paying them The fact is the government uses taxes to control the population, to force compliance and to regulate behavior. Only an authoritarian is happy with the idea of taxes being used as anything other then a means for the government to collect revenues.

 

[fskimospy]

First it's argued that taxes aren't heavy handed, then it's said try not paying them The fact is the government uses taxes to control the population, to force compliance and to regulate behavior. Only an authoritarian is happy with the idea of taxes being used as anything other then a means for the government to collect revenues.

Yes, taxes are both not heavy handed (in the previously mentioned circumstance) and still require compliance.

 

[bfdd]

everyone should pay the same rate and all money earned should be taxed as income. social welfare is only just if all participate in the cost and use of services. anyhingless spreads inequality

 

[Anarchist420]

I've never understood why so many liberals claim to be so smart yet they support higher marginal income tax rates. The most progressive tax is a real estate tax with a high exemption. Income tax is not a wealth tax and was never intended to be.

I don't advocate a wealth tax, but fiddling with the income tax code in the hope of punishing someone and getting more revenue is like beating a dead horse. They could reduce the top marginal rate to 20% and they could get more revenue than they would with it at 91%. There were more loopholes when it was 91% so revenues weren't higher. Marginal rates mean nothing and the wealthy write the tax code, so why would they not put in loopholes? Guess what Ted Kennedy did... he wrote the Federal Estate Tax, put a loophole in it, then didn't pay it. At least that's what I heard.

 

[Jhhnn]

everyone should pay the same rate and all money earned should be taxed as income. social welfare is only just if all participate in the cost and use of services. anyhingless spreads inequality

As if that has anything to do with reality.

The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.

Anatole France

 

[spacejamz]

Not only that, we now have mostly dual income households. Compare single incomes, and you'll see how far we've truly fallen.

Just imagine how much you could have each month if you didn't pay for a cell phone with unlimited data and texting plan, satellite TV or cable TV, high speed internet, $500/month car payment, $10 movie tickets with $15 in popcorn and drinks, can't forget the $30 dinner before the show...throw in a flat screen tv and some $20 blu rays...

 

[Jhhnn]

Just imagine how much you could have each month if you didn't pay for a cell phone with unlimited data and texting plan, satellite TV or cable TV, high speed internet, $500/month car payment, $10 movie tickets with $15 in popcorn and drinks, can't forget the $30 dinner before the show...throw in a flat screen tv and some $20 blu rays...

As if those attributions and aspersions apply to extremely low earners. They don't.

 

[soundforbjt]

As if those attributions and aspersions apply to extremely low earners. They don't.

Haven't you heard? Every right wing poster here "knows" poor people who drive Escalades, dine on steak every night, have flat screens and PS3's, IPhones, and have drug and alcohol addictions.

 

[monovillage]

Haven't you heard? Every right wing poster here "knows" poor people who drive Escalades, dine on steak every night, have flat screens and PS3's, IPhones, and have drug and alcohol addictions.

quote from Jhhnn

As if those attributions and aspersions apply to extremely low earners. They don't.

No, but we do know a very large number of relatively low wage earners that piss and moan and bitch about how much they make that still spend large amounts of their income on non-essentials and luxuries.

 

[Jhhnn]

quote from Jhhnn


No, but we do know a very large number of relatively low wage earners that piss and moan and bitch about how much they make that still spend large amounts of their income on non-essentials and luxuries.

I suspect that you "know" few if any, but that you imagine a multitude. The Census Bureau knows lots of people beat down by the Rise of Reaganomics & Bushonomics, however-

http://www.clevelandfed.org/research/data/us-inflation/mcpi.cfm

 

[WackyDan]

I don't like Orrin Hatch, but he's right. If you want the welfare everyone is going to have to pay close to the same rate of their income for it.

That's why I argue that the socialist welfare state in europe causing equality is an illusion. The Europeans just work harder than many americans do and they're a much less heterogeneous population. That's why a lot of the native born Europeans are up in arms about all the immigrants. What they don't seem to realize is that they'd be just as well off if they allowed the immigrants in and had a free market.

Since there is the MIC and since the regulations are probably worse here than they are in Europe, getting rid of the state would not cause the wealth inequality here to change (or anywhere else for that matter). People are inherently unequal, and some groups of people are smarter than others. There would not be complete happiness if we were all the same anyway because opposites tend to interbreed and a government could and would never mandate that all rich white people with high IQs interbreed with Bushmen, but it happens occasionally anyway. Some might view that as good others would view that as bad. Government cannot even change the overall happiness of society. Some people benefit, others lose. Those cancel each other out, and ethics is why you should not have government because it doesn't work as a utility to create equality (or inequality for that matter).

Europeans work harder? When the American worker time after time has been rated one of the highest producing?

The truly first world countries in the EU have more regulations than the US. Their employees enjoy more vacation time than even the professionally employed employees here in the U.S.

I work for a large corporation... We won't hire anyone in Denmark for example, because of the labor laws there. We are large enough that Denmark mandates that we give all our employees a certain percentage in raise... regardless of how good or bad an employee is. This decreases the size of the "raise bucket" for those that truly worked hard to make the company successful. It is almost impossible and too costly to fire someone there. Europeans by and large enjoy (by law) a very generous benefits package including retirement and labor laws that cost companies significantly. When leveraged in the perverse manner that is has been in Greece... You reap what is sown... and it is what will happen here as well.