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Should we have additional higher income tax brackets?

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BoberFett

Lifer
Oct 9, 1999
37,587
9
81
So then movie stars or those involved with selling things should also get taxed lower because there is risk involved?

Did you know that a car salesman who works on commission has his commission taxed at 35%? his salary isn't guaranteed either but he doesn't pay a lower rate.

Doesn't risk also bring a higher reward, isn't that why it's called risk?

Risk should not be given special treatment.
That'd demonstrably false. Commission may be withheld at 35%, I don't know, but they pay the same rates as everyone else.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,599
5
0
Bonuses, commissions, one time payments are taxed initially as if that amount was paid every week.

However, at the end of the year, it all washes out; extra was paid in; the unneeded difference can be returned or carried forward.
 

ivwshane

Lifer
May 15, 2000
28,656
8,777
136
You both fail to miss the point, a sales job were one is dependent on their ability to sell and various other factors that are beyond their control is a risk and they are taxed higher than those that supposedly take risks and pay only capital gains tax.
 

dank69

Lifer
Oct 6, 2009
26,290
6,388
136
Why should someone drive a car while I take a bus to work? Why should someone have a two story house when I have a single floor? Why should some people be able to eat at a resturant once a week while I can only afford once a month? Lets limit EVERYONE to the same everything. Itll be sterodic suburbs. Same car, same job, same pay, same mental abilities, same physical abilities..........I mean...........its not fair that SOME people can hit a home run out of yankee stadium and I cant. Therefore the only logical thing to do is bitch about it and stop them from succeding, just because I cant.
Reductio ad absurdum is only valid when it builds on assertions which are actually present in the argument it is deconstructing, and not when it misrepresents them as a straw man.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,599
5
0
You both fail to miss the point, a sales job were one is dependent on their ability to sell and various other factors that are beyond their control is a risk and they are taxed higher than those that supposedly take risks and pay only capital gains tax.
Blame Congress.

Capital gains is supposed to be for those that invest; take a chance on losing their investment.
That initial investment allows a company to grow - obtain cash to invest. The stock is an IOU by the company that a person takes ; gambling that the company will grow and be more valuable.

The company fails; the value of the IOU is nill; the person is out their investment.

In any type of wage job; your income is based on how well you execute - sales or salary; because you have that control; the security is greater and the tax level is greater.

Do not want the high wage tax bracket - make your income via capital gains.
 

Matt1970

Lifer
Mar 19, 2007
12,321
2
0
Why should someone make 5 million a year when so many are making a few thousands a year, and even worst many make nothing and are dying on the streets without shelter, food, and water.
We have already had tax rates even above what you propose and we still had homeless people.
 

BoberFett

Lifer
Oct 9, 1999
37,587
9
81
You both fail to miss the point, a sales job were one is dependent on their ability to sell and various other factors that are beyond their control is a risk and they are taxed higher than those that supposedly take risks and pay only capital gains tax.
No, you fail to understand simple information

They are taxed at their income rate. If someone sells one car all year, makes $500 and is taxed at 35%, when it comes time to file taxes at the end of the year they'll get back everything and pay 0% federal income tax.
 

DCal430

Diamond Member
Feb 12, 2011
6,021
9
81
So then movie stars or those involved with selling things should also get taxed lower because there is risk involved?

Did you know that a car salesman who works on commission has his commission taxed at 35%? his salary isn't guaranteed either but he doesn't pay a lower rate.

Doesn't risk also bring a higher reward, isn't that why it's called risk?

Risk should not be given special treatment.
I support higher taxes, but commision is NOT taxed at 35%, that is bunch nonsense. It is taxed at the income tax rate.
 

ivwshane

Lifer
May 15, 2000
28,656
8,777
136
Blame Congress.

Capital gains is supposed to be for those that invest; take a chance on losing their investment.
That initial investment allows a company to grow - obtain cash to invest. The stock is an IOU by the company that a person takes ; gambling that the company will grow and be more valuable.

The company fails; the value of the IOU is nill; the person is out their investment.

In any type of wage job; your income is based on how well you execute - sales or salary; because you have that control; the security is greater and the tax level is greater.

Do not want the high wage tax bracket - make your income via capital gains.

I'm not sure what the point of your post was but the topic is "should we have higher income tax brackets".

I said higher tax brackets don't matter because people don't pay them because their income is taxed differently. Someone said its because risk was involved and I pointed out how many jobs have risk and are taxed normally. You say blame congress, I know who to blame and it's irrelevant to the discussion.

If you want to make a case for why certain risks should be subsidized versus other types of risks then by all means reply.
 

ivwshane

Lifer
May 15, 2000
28,656
8,777
136
No, you fail to understand simple information

They are taxed at their income rate. If someone sells one car all year, makes $500 and is taxed at 35%, when it comes time to file taxes at the end of the year they'll get back everything and pay 0% federal income tax.
I support higher taxes, but commision is NOT taxed at 35%, that is bunch nonsense. It is taxed at the income tax rate.
Is that rate the same rate as capital gains tax rate? No it's not and that's the point.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,599
5
0
I'm not sure what the point of your post was but the topic is "should we have higher income tax brackets".

I said higher tax brackets don't matter because people don't pay them because their income is taxed differently. Someone said its because risk was involved and I pointed out how many jobs have risk and are taxed normally. You say blame congress, I know who to blame and it's irrelevant to the discussion.

If you want to make a case for why certain risks should be subsidized versus other types of risks then by all means reply.
Poster that I was quoting was bitching about the fact that capital gains are treated differently than a sales person's income.

I explained who to blame and why the so called inequity existed
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,916
172
106
In what way "didn't it work?"
-snip-
It's been a while so I'm a bit 'rusty' on the topic.

What Congress originally tried to do was make compensation in excess of $1 million non-deductible.

But we have tax laws that punish people for NOT taking FMV compensation. There is a SS tax saving motivation for making compensation smaller than FMV.

So, we have a case where these two laws or concepts conflict with each other.

So Congress added a portion to the law that said no deduction for compensation in excess of $1 million unless it was FMV. That, obviously, needed to be decided on a case-by-case basis. Now that is a problem. Because there are no clear-cut guidelines the whole question essentially needs to be litigated every time the IRS would challenge the deduction. That's an unworkable fuggin mess.

Also, and equally important, is the fact that the majority of those huge corporate exec compensation packages are paid not in cash, but in stock options. And you know what? Stock option compensation is NOT deductible in the first place so that law couldn't possibly apply.

End result: The thing was for all practical purpose useless so Congress just repealed it. They couldn't find a way to make it stick and began doubting the value of the whole policy to begin with.

This whole 'limiting the compensation of big execs to minimize the wealth gap' is something that starry eyed Progressives dream about but just won't work in the real world. Instead a couple of things will happen to defeat their objective:

1. Big corps are gonna pay for the top talent they feel they need. So, what you're left with is nothing more than a burden on shareholders and a policy that in actuality becomes a thinly disguised tax hike on corporations. Politically, that isn't popular.

2. The top talent is gonna make their money. If they can't make it at a US company they'll make it elsewhere working for a foreign company. I.e., the policy ends up in being a talent drain for the US. Bad idea.

Fern
 
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blankslate

Diamond Member
Jun 16, 2008
8,471
423
126
When the top marginal rates on incomes after the million dollar threshold was 91% the economy did fine.

Remember people making over 1 million dollars pay the same percentage on their first $50k as the person who only makes only $50k a year

they also pay the same percentage on their first $100k as the person who makes $100k a year.

This is again the same for the first $250k a year and so forth.

Tax credits do relieve the people at the lowest incomes but I'm not sure that all of the ones that exist now existed back in the 40's 50's and 60's

Just because you make over 1 million a year you don't get taxed at the highest rate on *all* of your income. You would only get taxed at the highest rates on income after a certain threshold.

Yes you'd be surprised how many of my acquaintances seemed to have this belief when the subject came up.
 
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Fern

Elite Member
Super Moderator
Sep 30, 2003
26,916
172
106
-snip-
And if anyone thinks high taxes would destroy job growth or the economy I'll refer you to post WWII when taxes were in the high 70%
Profit is profit and anyone that says no profit is better than less profit is full of shit.
I was around back when we had those high rates. No one paid them. There were a metric sh!t ton of deductions you've never heard of back then. So, it's really fantasy to claim people paid those rates and things were fine.

As to your last sentence I can see that you are a bit unfamiliar with business etc. 'Risk/reward' requires a certain Return on Capital and that is calculated on an after-tax basis. You jack up rates to 70% and most investment opportunities just aren't worth it.

Also high rates are a bad idea as acknowledged by economists. They may disagree somewhat at exactly what point tax rates become too high, but I'm pretty sure the vast majority would say that 70% is firmly in the "Too High" category.

I could go on but I'll stop here. Very high rates are a bad idea for a number of reasons.

Fern
 
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Fern

Elite Member
Super Moderator
Sep 30, 2003
26,916
172
106
You both fail to miss the point, a sales job were one is dependent on their ability to sell and various other factors that are beyond their control is a risk and they are taxed higher than those that supposedly take risks and pay only capital gains tax.
Jeebus man, how does a commissioned sales person "risk" their own capital?

(Hint: They don't. The 'reward' is that your compensation isn't limited as it is for a salaried person. The 'risk' is that they are unsuccessful and don't make much. But they're not gambling with their own capital etc.)

Fern
 
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DCal430

Diamond Member
Feb 12, 2011
6,021
9
81
I posted this in an older thread, but I still think this tax structure would work very well. IT would do wonders to discourage excess hoarding of wealth:

1. 25% Business Net Receipt Tax on all goods and services (including food)
2. 25% Business paid Tax on all individual employee pay and compensation between 1 million and 10 million. (includes base salary, stock options, gifts, etcetera)
3. 50% Business paid Tax on all individual employee pay and compensation over 10 million in a given year. (includes base salary, stock options, gifts, etcetera)
4. 10% payroll/self employment tax on earned income between 30,000 to 59,999 a year
5. 20% payroll/self employment tax on earned income between 60,000 to 99,999 a year
6. 35% payroll/self employment tax on earned income between 100,000 to 500,000 a year
7. 50% payroll/self employment tax on earned income over 500,000
8. 25% tax on all other income between 0 and 1 million. (Stock earning, dividends, capital gains, etcetera)
9. 50% tax on all other income over 1 million (Stock earning, dividends, capital gains, etcetera)
10. $250 a month rebate for each person, including children.
11. All tax revenue above will be divided 25% to the state and 75% to the federal government

All tax revenue below will be for federdal government only.
1. 25% estate tax for 1st 500k
2. 50% estate tax for 2nd 500k
3. 75% estate tax for over 1M.

All tax revenue below will be for states only

1. 1.5% property tax, with a 5% max increase in assessed value a year for a single primary place of residence.


THERE SHALL BE 0 DEDUCTIONS ON PAYROLL TAXES.
No one could say this isn't a fair tax system. Everyone is able to make a reasonable amount, and the people/government get their fairshare to use on needed programs.
 

ivwshane

Lifer
May 15, 2000
28,656
8,777
136
I was around back when we had those high rates. No one paid them. There were a metric sh!t ton of deductions you've never heard of back then. So, it's really fantasy to claim people paid those rates and things were fine.

As to your last sentence I can see that you are a bit unfamiliar with business etc. 'Risk/reward' requires a certain Return on Capital and that is calculated on an after-tax basis. You jack up rates to 70% and most investment opportunities just aren't worth it.

Also high rates are a bad idea as acknowledged by economists. They may disagree somewhat at exactly what point tax rates become too high, but I'm pretty sure the vast majority would say that 70% is firmly in the "Too High" category.

I could go on but I'll stop here. Very high rates are a bad idea for a number of reasons.

Fern
Did you read my first post or do you like arguing against a point that wasn't made? My solution was that all income regardless of where it came from should be taxed the same way and the amount of deductions should be limited and to balance that, lower rates at the high end would be ok.
 

Jhhnn

No Lifer
Nov 11, 1999
61,662
13,746
136
When the top marginal rates on incomes after the million dollar threshold was 91% the economy did fine.

Remember people making over 1 million dollars pay the same percentage on their first $50k as the person who only makes only $50k a year

they also pay the same percentage on their first $100k as the person who makes $100k a year.

This is again the same for the first $250k a year and so forth.

Tax credits do relieve the people at the lowest incomes but I'm not sure that all of the ones that exist now existed back in the 40's 50's and 60's

Just because you make over 1 million a year you don't get taxed at the highest rate on *all* of your income. You would only get taxed at the highest rates on income after a certain threshold.

Yes you'd be surprised how many of my acquaintances seemed to have this belief when the subject came up.
I was around back when we had those high rates. No one paid them. There were a metric sh!t ton of deductions you've never heard of back then. So, it's really fantasy to claim people paid those rates and things were fine.

As to your last sentence I can see that you are a bit unfamiliar with business etc. 'Risk/reward' requires a certain Return on Capital and that is calculated on an after-tax basis. You jack up rates to 70% and most investment opportunities just aren't worth it.

Also high rates are a bad idea as acknowledged by economists. They may disagree somewhat at exactly what point tax rates become too high, but I'm pretty sure the vast majority would say that 70% is firmly in the "Too High" category.

I could go on but I'll stop here. Very high rates are a bad idea for a number of reasons.

Fern
Both of you are correct. Even though virtually nobody paid those very high marginal rates, effective tax rates of very high incomes were ~50% higher in 1980-

http://taxfoundation.org/article/summary-latest-federal-individual-income-tax-data-0

Middle class people tend to think in the terms that relate to our own incomes, not in terms of enormous incomes where only a small % is actually spent on lifestyle. If our taxes go up substantially, our lifestyles suffer. That's not true for people with enormous incomes, not at all.

Pay 38% federal income taxes on $10M/yr or more? If that was something where we could just sign up, the line would be very, very long.... 50%? 70%? The line would be just as long...
 

ivwshane

Lifer
May 15, 2000
28,656
8,777
136
Jeebus man, how does a commissioned sales person "risk" their own capital?

(Hint: They don't. The 'reward' is that your compensation isn't limited as it is for a salaried person. The 'risk' is that they are unsuccessful and don't make much. But they're not gambling with their own capital etc.)

Fern
Like every other business you have profit and loss. Higher risk usually means higher reward, higher loss equals a larger deduction for expenses. There is no need to subsidize risk and you have yet to show otherwise.

Should gambling be rewarded with low taxes? That's what capital gains do.
 

Jhhnn

No Lifer
Nov 11, 1999
61,662
13,746
136
I object to the whole song & dance about investment & "risk". People of enormous wealth have very, very diversified holdings in stocks, bonds, income generating real estate & so forth on an international level. They also have staffs to advise & manage all that, and generally observe the general rules of the investment pyramid-



And, of course, the greater the wealth, the greater the ability to diversify & to withstand any setbacks. Even if they actually incur losses sufficient to crimp their incomes, they can selectively liquidate holdings, look to future earnings to recoup.

That's not true for working people, at all. You can't diversify your job, and you can't make up for reduced buying power of your native currency with gains in other currencies- you only get paid in one currency, and you simply don't have enough money to engage in arbitrage at that level.

Risk at the top o' the heap? Only wrt their balance sheets, not the way they live.
 
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Fern

Elite Member
Super Moderator
Sep 30, 2003
26,916
172
106
Like every other business you have profit and loss. Higher risk usually means higher reward, higher loss equals a larger deduction for expenses. There is no need to subsidize risk and you have yet to show otherwise.

Should gambling be rewarded with low taxes? That's what capital gains do.
No. The lower rate is there for inflation and other policy factors. Gambling income is taxed at regular rates, it's in tax law (and losses to the extent not offset by current winnings are nondeductible) .

Fern
 
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Jhhnn

No Lifer
Nov 11, 1999
61,662
13,746
136
No. The lower rate is there for inflation and other policy factors. Gambling income is taxed at regular, it's in tax law (and losses to the extent not offset by current winnings are nondeductible) .

Fern
Oh, please. Gambling in the market is little different than gambling at the track or the casino, and high level risk in derivatives is pure gambling, because one need not have any insurable interest to participate.

Just because they're taxed at different rates doesn't mean that one is any less a form of gambling than the other.
 

blankslate

Diamond Member
Jun 16, 2008
8,471
423
126
In my opinion we should at least return to the top marginal tax rates that were in effect in the 90s. ~39.6% iirc.

Reinstate Glass-Steagall.

put a small < 1% tax on every financial stock transaction to slow down the lightning speed trades made by computer programs on Wall Street.

And look at ways where we can cut costs with the least amount of harm to the citizenry who do actually need assistance.
 

ivwshane

Lifer
May 15, 2000
28,656
8,777
136
Oh, please. Gambling in the market is little different than gambling at the track or the casino, and high level risk in derivatives is pure gambling, because one need not have any insurable interest to participate.

Just because they're taxed at different rates doesn't mean that one is any less a form of gambling than the other.
Exactly and no one in this thread has yet to make the case saying otherwise.
 

werepossum

Elite Member
Jul 10, 2006
29,876
460
126
Because most people dont give a shit about them fellow humans.
:D Ah, the proggie theme song! I care soooo much I'm willing to give you as much of other people's money as you need. Aren't I great?

I was around back when we had those high rates. No one paid them. There were a metric sh!t ton of deductions you've never heard of back then. So, it's really fantasy to claim people paid those rates and things were fine.

As to your last sentence I can see that you are a bit unfamiliar with business etc. 'Risk/reward' requires a certain Return on Capital and that is calculated on an after-tax basis. You jack up rates to 70% and most investment opportunities just aren't worth it.

Also high rates are a bad idea as acknowledged by economists. They may disagree somewhat at exactly what point tax rates become too high, but I'm pretty sure the vast majority would say that 70% is firmly in the "Too High" category.

I could go on but I'll stop here. Very high rates are a bad idea for a number of reasons.

Fern
High rates coupled with many deductions just gives government the power to control people. Morally I think that's unsupportable. I also think that when government takes as much or more of one's income as it leaves, one is effectively property, which is equally immoral.

Also, capital is easily transportable in today's world. As Great Britain learned when it set marginal rates at 90%, the wealthy either ceased the economic activity or moved it (and themselves) out of the country.
 

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