Paying "fair share", and what does that mean to you?

[ProfJohn]

I had a typo. I'm saying if you only pay 26% you are not in the highest bracket and you are not who most people are talking about when they say you should pay more taxes.

If he has an effective rate of 26% then he is in the top bracket.

Keep in mind that no one pays even close to their bracket rate.

I am in the 25% bracket and paid around 11% last year.

BTW he could be in the 33% bracket instead of the 35% one, either way his bracket rate is MUCH higher than his actual tax rate.

 

[Argo]

I had a typo. I'm saying if you only pay 26% you are not in the highest bracket and you are not who most people are talking about when they say you should pay more taxes.

Maybe, maybe not - I have no way of knowing what exactly people have in mind when they say "you must pay fair share". I'm just going on based on most proposals that if enacted would increase my taxes.

 

[Infohawk]

Maybe, maybe not - I have no way of knowing what exactly people have in mind when they say "you must pay fair share". I'm just going on based on most proposals that if enacted would increase my taxes.

Which proposals are you thinking of?

 

[fskimospy]

Read it one more time. I am not in 26% bracket, I pay 26% since the brackets are incremental.

Also, to another poster - yes, the tax increases proposed so far will affect me. Not a whole lot, but they still will. And yes, many are right - my income comes from W2 so it is *NOT* taxed at 15% rate. But then why are most tax increases being discussed mention increasing taxes on those making over 250k, rather than changing capital gains taxation?

If you pay a 26% total tax rate that means you are making somewhere around $200,000 a year. (probably a little bit more) Let's say you make $250,000 with your deductions. Fair?

If that's the case, there's really almost no push for you to be paying more in taxes, and any increases you might see would be quite small. I don't know if you're single or not, but the only tax rate increases that are being pushed for are for $200,000 more for single, and $250,000 more for households. Say you've got the worst case scenario and are single. The other tax brackets would be unaffected, so you would only be getting taxed about 3% more on maybe 20% of your income, which would come out to about 1,500 a year, or about 0.6% of the money you make.

Is ~0.6% of your income really what you are mad about?

Just as an offhand comment, btw. I am very impressed with the right wing contributors to this board! It never ceases to amaze me how well represented the top 1% and above income bracket is on an obscure politics board attached to a tech website. I mean what are the odds that we would have the privilege of being among so many of the well heeled!

EDIT: Fixed my math.

 

[Argo]

Which proposals are you thinking of?

My state's attempt to enact 5% tax on people making over 200k.
An attempt to expire Bush tax cuts that would increase taxes on people making over 250k

 

[IBMer]

The bolded part is complete BS.

Don't fall for the lies and exaggerations.

The top 400 had an average effective income tax rate of 16%.

Here are the effective income tax rates by quintile for 2007
bottom 20% -6.8%
second 20% -0.4%
middle 20% 3.3%
fourth 20% 6.2%
top 20% 14.4%
top 10% 16.2%
top 5% 17.6%
top 1% 19%

As you can see even at 16% they are paying more of their income into income taxes than all but the top 10% of the country.

Close the loophole and make them pay at a higher rate. But don't pretend that middle class Americans are seeing more of their money go to taxes than the rich.

I am certainly not in the top 20% and I paid 14%. In fact I am right at the median income.

 

[her209]

Do you own a small business OP? Is that your sole source of income?

 

[Argo]

If you pay a 26% total tax rate that means you are making somewhere around $200,000 a year. (probably a little bit more) Let's say you make $250,000 with your deductions. Fair?

If that's the case, there's really almost no push for you to be paying more in taxes, and any increases you might see would be quite small. I don't know if you're single or not, but the only tax rate increases that are being pushed for are for $200,000 more for single, and $250,000 more for households. Say you've got the worst case scenario and are single. The other tax brackets would be unaffected, so you would only be getting taxed about 3% more on maybe 25% of your income, which would come out to about 2,000 a year, or about 0.8% of the money you make.

Is ~0.8% of your income really what you are mad about?

Just as an offhand comment, btw. I am very impressed with the right wing contributors to this board! It never ceases to amaze me how well represented the top 1% and above income bracket is on an obscure politics board attached to a tech website. I mean what are the odds that we would have the privilege of being among so many of the well heeled!

You are in that the impact would not be small (your math is a bit off, but you're generally within range). But my personal belief is that "just because I can afford" doesn't mean I have to. Otherwise, where does it end? Or who decides where it ends? Those several thousand dollars is money I could use on myself or my family - I'm definitely not rich enough where I could throw away 2k and not care about it.

You can extend that same argument to 10%, or 15%. Or you can extend that argument to others areas of life as well. You don't need the entire space of your house - so it probably won't affect you much if a homeless person sleeps in your yard.

I guess the above is the ideological difference between people like us that is impossible to resolve. Hence our inability to reach a consensus. And for the record I am not a republican or a democrat. And neither do I associate with any political movement like tea party. And I don't mind paying taxes - because I get a lot from this country. I just have an issue when people consider that I don't pay my fair share and need to pay more.

 

[Argo]

Do you own a small business OP? Is that your sole source of income?

Nope. Salary.

 

[Infohawk]

My state's attempt to enact 5% tax on people making over 200k.
An attempt to expire Bush tax cuts that would increase taxes on people making over 250k

Yeah, so then I go back to my original post that gives the common rationale for taxing high income people. Basically, your wealth only makes sense in the context of society and you're paying to maintain the status quo in society.

 

[mattpegher]

Usually people mean pay your share of taxes based on your share of controlled wealth. IIRC, the top 1% of the US has more money than the bottom 50%. It would then make sense that the top 1% pay more than the bottom 50%.

The exact numbers? I don't know. I'm jus' sayin'

Yes but none of us or anyone any of us know are in the top 1%. That demographic makes more thatn 380k/yr (for 2008). They also control the government such that all the loop holes that let them keep their money are not likely to disappear. The bottom 50% make less than 30k/year. I would be willing to bet most of the ATOTers aren't in that group either.

If you believe these folks however.

http://ntu.org/tax-basics/who-pays-income-taxes.html

More than half of the federal taxes come from the top 5%. What I would like to see is what the average tax paid by earners at 10k/yr, 20k/yr, 50k/yr, 100k/yr, etc. Then we could see what fair is.

 

[fskimospy]

You are in that the impact would not be small (your math is a bit off, but you're generally within range). But my personal belief is that "just because I can afford" doesn't mean I have to. Otherwise, where does it end? Or who decides where it ends? Those several thousand dollars is money I could use on myself or my family - I'm definitely not rich enough where I could throw away 2k and not care about it.

You can extend that same argument to 10%, or 15%. Or you can extend that argument to others areas of life as well. You don't need the entire space of your house - so it probably won't affect you much if a homeless person sleeps in your yard.

I guess the above is the ideological difference between people like us that is impossible to resolve. Hence our inability to reach a consensus. And for the record I am not a republican or a democrat. And neither do I associate with any political movement like tea party.

It's not an ideological gap at all really, it's just how the world works. Your tax rates are decided upon by society at large, and it is this same society that perpetuates the situation where you can make such a salary. If the rates demanded of you in order to participate are too onerous for you and you no longer wish to engage in this arrangement, no one will stop you from leaving. You are also free to lobby government with other like minded people to change the rules to be more to your liking.

You're attempting to use a slippery slope fallacy that can be used against any taxation whatsoever, even the smallest amount. I find the 'who can afford it' argument to be silly, as the amount someone can afford is sort of irrelevant. All that really matters is what levels of taxation work best for the most people in our country, as...well... that's sort of the whole point.

 

[fskimospy]

To be clearer, people think our country would work better with higher marginal tax rates on the top 1%. Fairness has nothing to do with it, as life isn't fair.

 

[BoberFett]

Paying your fair share means the top 400 taxpayers pay more than 16.6% effective tax rate. I have a higher effective tax rate than this and i make far less.

http://blogs.wsj.com/economics/2010/02/17/a-look-at-the-tax-returns-of-the-top-400-taxpayers/

The really disgusting thing about this the fact that a good chunk of their incomes are just passive investments while most regular middle class folks are paying a higher tax rate WORKING.

The other disgusting thing is, shithead conservatives will rush to defend this regressive tax structure, is it any wonder this country is going down the toilet?

Those people should definitely pay a lot more, but why do stupid Democrats insist on lumping those 400 massive earners in with people making $250K? Democrats don't seem to see a difference between $250K and $250M. To morons like you, those are the same class of evil rich that need to be destroyed.

 

[Argo]

It's not an ideological gap at all really, it's just how the world works. Your tax rates are decided upon by society at large, and it is this same society that perpetuates the situation where you can make such a salary. If the rates demanded of you in order to participate are too onerous for you and you no longer wish to engage in this arrangement, no one will stop you from leaving. You are also free to lobby government with other like minded people to change the rules to be more to your liking.

You're attempting to use a slippery slope fallacy that can be used against any taxation whatsoever, even the smallest amount. I find the 'who can afford it' argument to be silly, as the amount someone can afford is sort of irrelevant. All that really matters is what levels of taxation work best for the most people in our country, as...well... that's sort of the whole point.

So if majority of society has collectively decided that slavery is good thing for society we should bring it back? Or do you truly want a group of corrupt and mostly incompetent people that were elected into office to decide what is good for society?

 

[monovillage]

Your "fair share" is of course 100% of everything you earn and own. Only through the grace of a very generous Federal Government are you allowed to keep the percentage of earnings that you now have. You should be grateful that by the time all your taxes/fees/licenses etc. have been paid that you get to keep less then 50% of what you earn.

 

[uclaLabrat]

First of all, if you're only in the 26% bracket I question whether you're one of the people that people are saying need to pay more at this period of time. From what I've heard you need to be closer to $200,000 which would put you in the 30+ bracket. But maybe I'm misunderstanding you.

Second of all, most people tend to incorrectly think of themselves as islands. Humans are extremely social primates. Beyond that, almost everything you have is thanks to civilization. You could be the smartest guy in the world but if there was no civilization around you, you would be lucky if you had shelter and fire.

Who benefits more from civilization? You or a bum? I would say that you do. A bum could die, sure. But you could lose all your wealth, your job, your family and then die. You're paying to preserve those things. So when people talk about your fair share they're talking about people with more interests in society paying more.

This. And people scream about the entitlement mentality of the poor! The rich have a far higher entitlement mentality then any poor person I've ever met. They expect things for free or at a discount, and bitch when they don't get it. It really is amazing.

 

[fskimospy]

So if majority of society has collectively decided that slavery is good thing for society we should bring it back?

That's not how our country works. In order to bring back slavery you would need a 2/3rds majority in both houses and 3/4ths of the states, which is quite a lot more than a 'majority of society'. Regardless of that, there is certainly some rational limit to what any legitimate society should be able to do, but you're again treading close to a reducto ad absurdum argument. Raising marginal tax rates by 3% is not even remotely similar to the mass enslavement, rape, and murder of millions of people, and so to attack one with the other is a bit silly.

I will insert a caveat that I didn't think was necessary, that there is of course a rational limit to what society can morally do to people that reside in it. But I think that any reasonable person would admit that a 3% tax increase on dollars earned in excess of $250,000 is within those reasonable limits. Within those limits, the only thing that matters is what society as a whole believes is best for it. Nobody is forcing you to participate in America and there are many other places you could go if you so choose. Again, you are also free to try and change the laws here if you think you have a better idea. (and maybe it will be, and we all will benefit!)

All that being said, an argument about what is 'fair' or not holds very little water with me. As more conservative minded people frequently say, life isn't fair.

EDIT: Of course I want elected people to decide what is best for society. That's literally the whole point of representative democracy. If you don't believe that, then you should tear up the Constitution.

 

[ShawnD1]

So if majority of society has collectively decided that slavery is good thing for society we should bring it back?

Uh yes? That's how democracy works, and that actually did happen. People voted that they would gladly ship all jobs to China where people are basically slaves. Many of them literally are slaves; they are prisoners in forced labor camps. When anyone suggests putting huge import taxes on Chinese slave products, both parties vote against it.

 

[yllus]

Sidestepping who pays how much and how fair it is, how about looking at where that money is spent? According to http://www.whitehouse.gov/issues/taxes/tax-receipt , the big four costs paid for by federal taxes are:

National Defence = 26.3%
Health Care = 24.3%
Job and Family Security = 21.9%
Interest on Existing Debt = 7.4%

Under "National Defense", "Ongoing operations, equipment, and supplies" is 10.5% of your tax bill, "Research, development, weapons, and construction" is 8.8% and "Military personnel salaries and benefits" is 6.0% of your taxes. Under "Job and Family Security", "Unemployment insurance" is 4.4% of your tax bill, "Food and nutrition assistance" is 3.6%, and "Housing assistance" is 2.2%.

The blame game probably isn't going to lead anywhere. Instead, how about you lobby for cuts?

 

[Infohawk]

To be clearer, people think our country would work better with higher marginal tax rates on the top 1%. Fairness has nothing to do with it, as life isn't fair.

You weaken your argument by saying crapping on fairness.

Fairness matters to everyone. (And when we talk about fairness it's not about whether you're born beautiful or not, it's about human rules being fair.) Is it fair for people with more wealth to be taxed more? Sure. They get more benefits from civilization than other people do. The vast majority of people that don't think progressive taxation is fair are people that believe in silly natural law ideas where people pre-existed social rules.

 

[DominionSeraph]

OP, what product are you making that's worth $250k/yr? What finished product comes out of your hands that I would say, "Yup, I'd pay $250k for that!"

In all likelihood you are either a financial leech (like a lawyer) or you simply boost the productivity of real workers. Assuming the latter, your high salary is just a function of employers being able to keep the wages of the real labor force stagnant, thus overvaluing your effect.

The real labor force is more productive than ever, yet they aren't seeing any of those gains in their paycheck. Instead the output of their labor is being funneled to the top.
Progressive taxation is merely a simple, straightforward way to funnel some of that money back to the real earners. To do it without taxation would require an insane amount of micromanaged regulation over corporate affairs. You'd be looking at a largely planned economy, and good luck making one of those work. Running a planned economy would be beyond my ability, and I'm fucking God.

So stop complaining.

 

[jhu]

P.S. And if there are some loopholes that apparently allow rich to not pay taxes, can somebody please point those out to me.

One obvious way is to buy a bunch of municipal bonds. After that, your income from those bonds are tax free. If you had millions of dollars worth of municipal bonds, you could easily be making $500+k a year tax free. Of course there's still the risk of the municipality defaulting on those bonds.

 

[Infohawk]

Sidestepping who pays how much and how fair it is

Why would we do that in a thread that is about "fair share"? It's important to look at expenditures but here it just seems like you're off topic.

 

[Argo]

That's not how our country works. In order to bring back slavery you would need a 2/3rds majority in both houses and 3/4ths of the states, which is quite a lot more than a 'majority of society'. Regardless of that, there is certainly some rational limit to what any legitimate society should be able to do, but you're again treading close to a reducto ad absurdum argument. Raising marginal tax rates by 3% is not even remotely similar to the mass enslavement, rape, and murder of millions of people, and so to attack one with the other is a bit silly.

I will insert a caveat that I didn't think was necessary, that there is of course a rational limit to what society can morally do to people that reside in it. But I think that any reasonable person would admit that a 3% tax increase on dollars earned in excess of $250,000 is within those reasonable limits. Within those limits, the only thing that matters is what society as a whole believes is best for it. Nobody is forcing you to participate in America and there are many other places you could go if you so choose. Again, you are also free to try and change the laws here if you think you have a better idea. (and maybe it will be, and we all will benefit!)

All that being said, an argument about what is 'fair' or not holds very little water with me. As more conservative minded people frequently say, life isn't fair.

EDIT: Of course I want elected people to decide what is best for society. That's literally the whole point of representative democracy. If you don't believe that, then you should tear up the Constitution.

Based on what you said then you shouldn't have any problems with what's going on right now with the debt talks, right? We need majority in both houses to enact tax increases, and if we cannot get that then we should not increase the taxes.

Or are you going to still complain how some don't pay their fair share?