Super rich see federal taxes drop dramatically

Page 5 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.

Throckmorton

Lifer
Aug 23, 2007
16,829
3
0
And I wonder what he pays in taxes during the good years?

Still wouldn't consider him "rich." The rich pull in 7+ figures a year. The super rich pull in $100 mil +.

I'd say if you're in the top 10%, of course you're rich. If you're in the top 10% of IQ, are you not considered intelligent? If your GPA is in the top 10% of a class, do you not get honors?
 

Infohawk

Lifer
Jan 12, 2002
17,844
1
0
And I wonder what he pays in taxes during the good years?

Still wouldn't consider him "rich." The rich pull in 7+ figures a year. The super rich pull in $100 mil +.

Although it's not that useful to argue over the exact definition of rich, Wikipedia says the top 5% of the income distribution starts only at $150,000. He's probably in the top 1%. It's reasonable to say that he's rich by that standard. Obviously, we all know there are much richer people than that but still.

The more interesting question is what he paid during the good years. Obviously it was more, but this is still a place where the middle class gets fucked again. Say a guy makes $50,000/year for two years and then is unemployed for one year. He's paying the 50k tax bracket for two years and does not get to discount his year of no income. Meanwhile if you have investment income you're allowed to offset. A bit backwards if you ask me.
 

Genx87

Lifer
Apr 8, 2002
41,091
513
126
I'd say if you're in the top 10%, of course you're rich. If you're in the top 10% of IQ, are you not considered intelligent? If your GPA is in the top 10% of a class, do you not get honors?

IQ and Class size are consistent. Income growth is exponential. I wouldnt say the top 10% arent necessarily rich. I would definately say once you hit the top 5% you are getting there. But my definition of rich is somebody who doesnt have to work for a living. I believe top 5% puts you at 200K or better.

edit: Ok looking at Infohawks post above. I wouldnt even consider being the top 5% to be "rich". Guess it is closer to top 2-3% then.
 
Last edited:

Genx87

Lifer
Apr 8, 2002
41,091
513
126
Although it's not that useful to argue over the exact definition of rich, Wikipedia says the top 5% of the income distribution starts only at $150,000. He's probably in the top 1%. It's reasonable to say that he's rich by that standard. Obviously, we all know there are much richer people than that but still.

The more interesting question is what he paid during the good years. Obviously it was more, but this is still a place where the middle class gets fucked again. Say a guy makes $50,000/year for two years and then is unemployed for one year. He's paying the 50k tax bracket for two years and does not get to discount his year of no income. Meanwhile if you have investment income you're allowed to offset. A bit backwards if you ask me.

Income is earned once, investment income isnt. If you dont work, you didnt lose any money, you simply didnt earn anything. If you invest in an asset and sell it for a loss. You experiences an actual loss of wealth. But the govt has their cake and eats it too with that crap. You can only forward 3K\year from a capital loss on your income taxes. While they want to get paid up front from any capital gain.
 

Throckmorton

Lifer
Aug 23, 2007
16,829
3
0
IQ and Class size are consistent. Income growth is exponential. I wouldnt say the top 10% arent necessarily rich. I would definately say once you hit the top 5% you are getting there. But my definition of rich is somebody who doesnt have to work for a living. I believe top 5% puts you at 200K or better.

edit: Ok looking at Infohawks post above. I wouldnt even consider being the top 5% to be "rich". Guess it is closer to top 2-3% then.

To me $150k is rich. There's difference between rich and "opulence, I has it"
 

Infohawk

Lifer
Jan 12, 2002
17,844
1
0
Income is earned once, investment income isnt. If you dont work, you didnt lose any money, you simply didnt earn anything. If you invest in an asset and sell it for a loss. You experiences an actual loss of wealth. But the govt has their cake and eats it too with that crap. You can only forward 3K\year from a capital loss on your income taxes. While they want to get paid up front from any capital gain.

The way I see it is for investment you're allowed to spread the risk across several years and wage-earners don't have that option.

It's a complicated issue and I'm not a fan of taxing investments just to be mean to the rich. But at the end of the day if you're able to generate $500,000 from investments in any given year but only pay $2,000 in taxes there's a problem. And for most non-wealthy people the 401K and IRA are able to shield from a lot of taxes.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,266
126
If you believe this, I got some fiscally responsible Republicans for you to vote for.


Where did I say the Republicans would back reform on this issue? The clear implication was that neither side would so one saying "the other won't allow it" is pointless.

If you are correct in saying that the Reps started it and the Dems won't fix it then the result is nothing gets done.
 

novasatori

Diamond Member
Feb 27, 2003
3,851
1
0
No he is correct. Federal INCOME tax. SS, Medicare, Medicaid, are not income tax. They are taxes for those programs solely.
I take it you don't even do your own taxes. When filling tax returns, there are no options to reduce your SS, Med taxes. It's all based on your Federal Income tax (or state if you have state income tax).

It's people like you and the other sheep of the Democrat party that like to over simplify things.
http://libertyworks.com/
When the Bush tax cuts were enacted, income taxes had been steadily declining based on the Clinton tax rates. When the Boosh tax cuts where inacted, Income tax revenue INCREASED. Infact, thee 2007 tax year was the largest income tax intake in history. Taxes aren't the problem. SPENDING is. Congress needs to stop spending OUR money.
Anyone that thinks raising taxes on the "rich" is the answer has fallen for the class warfare scam that the Democrats are piling on. It's nothing more than another way for them to garner votes, tax money away from the successful and productive, and give just enough to the lowest earners, to make them feel better, but not actually impact their lives to the point of making them productive.

Did you even read my post? Same with the other guy who quoted me.

I did do my own taxes, and I know and already even said, what you pointed out.

The person I quoted however even said pay "NO TAX" he did not qualify it with federal income tax, which is a LIE. "Taxes" are paid by the poor, do you deny it?

I felt it was disingenuous to come here and claim people are paying "NO TAX" and you can't look at it saying that people don't pay a tax just because they don't pay an "income tax".

Do you talk down to me because I am poor?
 
Last edited:

Genx87

Lifer
Apr 8, 2002
41,091
513
126
The way I see it is for investment you're allowed to spread the risk across several years and wage-earners don't have that option.

It's a complicated issue and I'm not a fan of taxing investments just to be mean to the rich. But at the end of the day if you're able to generate $500,000 from investments in any given year but only pay $2,000 in taxes there's a problem. And for most non-wealthy people the 401K and IRA are able to shield from a lot of taxes.

What do you want moved forward though? Income taxes are based on generating income. In your example if a guy works for 2 years at 50K and the 3rd year doesnt generate a penny of income. He doesnt pay any income tax.

I agree with you it sounds adbsurd. But this article is so poorly written and leaves out important info. I cant draw any conclusions from this one example. I could invest in municipal bonds and pay 0% tax. That is a govt issued bond.

My issue with people is they are mixing investments and earning an income. There is a reason why incenticize investing in this country. It spurs growth far faster than waiting for govt to fund something. If we mess with capital gains to get the "rich". I think the ultimate people who will pay are the middle class. The rich will take their money off shore. The middle class lack that mobility and the path of destruction left by going after these rich could be far more devasting to the middle class.

When you mess with long term capital gains. You are messing with people's retirement funds. If you mess with it enough, the financial markets will lack the capital needed to generate growth in our economy because the rich left and the middle class are putting their money in a mattress or sitting on it.
 

Infohawk

Lifer
Jan 12, 2002
17,844
1
0
What do you want moved forward though? Income taxes are based on generating income. In your example if a guy works for 2 years at 50K and the 3rd year doesnt generate a penny of income. He doesnt pay any income tax.

I agree with you it sounds adbsurd. But this article is so poorly written and leaves out important info. I cant draw any conclusions from this one example. I could invest in municipal bonds and pay 0% tax. That is a govt issued bond.

My issue with people is they are mixing investments and earning an income. There is a reason why incenticize investing in this country. It spurs growth far faster than waiting for govt to fund something. If we mess with capital gains to get the "rich". I think the ultimate people who will pay are the middle class. The rich will take their money off shore. The middle class lack that mobility and the path of destruction left by going after these rich could be far more devasting to the middle class.

When you mess with long term capital gains. You are messing with people's retirement funds. If you mess with it enough, the financial markets will lack the capital needed to generate growth in our economy because the rich left and the middle class are putting their money in a mattress or sitting on it.

I'm not saying it's the way we should go there (in fact I think we need to stay away from deductions and complicated systems) but you could have it set up so that being unemployed in your third year entitles you to a rebate from your previous two years. I agree that we want to incentivize investing but at the end of the day you can also argue that we should incentivize income and spending too. The middle class and poor spend more of their income on things that drive the economy too. I think we both agree that taxation of any kind except for things like vices is ugly, but we have to do it.

How can we improve? Again, let's simplify things. Maybe these local bonds should be taxable. Yes it will deprive local governments of cheap money but there is just too much going on in the tax code right now. I'm pretty much in favor of a flat tax with some progressive rate differences included.
 

Fern

Elite Member
Sep 30, 2003
26,907
173
106
Paging Fern.

The only thing I can think of is some real estate tax shelter but those have deduction limits against wage income.

I'm calling shens on the below.

Shoenberg, who now teaches a business class at Columbia University, said his income is usually "north of half a million a year." But 2009 was a bad year for investments, so his income dropped to a little over $200,000. His federal income tax bill was a little more than $2,000.

Didn't read the whole thread, but I'll say at $200K income it's dang hard to get down to a fed income tax bill of $2,000.

So he inhereted a lot of money. Conceivably he could have made large charitable contributions, but those are, under the best circumstances, limited to 50% of your income (AGI). Any excess is carried over to future years.

Can't be because of capital losses, net capital losses are limited to $3,000 per year. Again, any excess is carried over.

Mortgage interest seems unlikely. First, he wouldn't seem to need a mortgage. Second, it's limited to no more than $1 million of mortgage. At most that's about $40k or so.

Might be that his investments are in foreign countries and he pays tax there. If so, he's paying income tax, just not much to the USA.

I'll also add, we don't really know what he means by "$200k of income". We do know he received an inheretence, it's possible that large losses flowed through to his return from the trust set up under the inheretence.

His situation is too vague and too unusual to be used to draw conclusions from IMO. (Again, I only read about 50 posts, so pardon me if more info was later developed)

Edit: Forgot to mention the Alternative Minimum Tax (most itemized deuctions not allowed, no exemptions etc). Hard to see how he legitimately got to a bill of $2K on $200K income.

Edit #2: After thinking more, I'm gonna have to assume he used TurboTax and got tax advice help from Tim Geitner. :)

Fern
 
Last edited:

jonks

Lifer
Feb 7, 2005
13,918
20
81
To me $150k is rich. There's difference between rich and "opulence, I has it"

And to a homeless person the immigrant with 4 jobs living in the house with 14 people pulling down $20k/yr is rich. If you consider $150k rich you are speaking more about you than the guy making $150k, which is not wealthy. Two teachers pulling down a combined income of $150k are not rich. They're doing fine maybe, but let's save rich for at least the millionaires, and even there arguments can be had.
 

senseamp

Lifer
Feb 5, 2006
35,787
6,197
126
Where did I say the Republicans would back reform on this issue? The clear implication was that neither side would so one saying "the other won't allow it" is pointless.

If you are correct in saying that the Reps started it and the Dems won't fix it then the result is nothing gets done.

Even if that's true, this is why it's better to never let the side that started it start any other sh!t. It's going to be a long time before it gets fixed.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,266
126
Sounds good to me, hopefully the economy will tank next October and make Obama an one term President.

That's not enough. It's easy to say Obama is responsible for a given mess, but the reality is that it's been with us all along. So let's say that Obama is gone, but who will really address the problem and follow through? Not one I know of, and if some person were to miraculously fall through the political sifting screens then we shall know it by Swift's quote:

"When a true genius appears in the world, you may know him by this sign, that the dunces are all in confederacy against him.
 

Genx87

Lifer
Apr 8, 2002
41,091
513
126
I'm calling shens on the below.



Didn't read the whole thread, but I'll say at $200K income it's dang hard to get down to a fed income tax bill of $2,000.

So he inhereted a lot of money. Conceivably he could have made large charitable contributions, but those are, under the best circumstances, limited to 50% of your income (AGI). Any excess is carried over to future years.

Can't be because of capital losses, net capital losses are limited to $3,000 per year. Again, any excess is carried over.

Mortgage interest seems unlikely. First, he wouldn't seem to need a mortgage. Second, it's limited to no more than $1 million of mortgage. At most that's about $40k or so.

Might be that his investments are in foreign countries and he pays tax there. If so, he's paying income tax, just not much to the USA.

I'll also add, we don't really know what he means by "$200k of income". We do know he received an inheretence, it's possible that large losses flowed through to his return from the trust set up under the inheretence.

His situation is too vague and too unusual to be used to draw conclusions from IMO. (Again, I only read about 50 posts, so pardon me if more info was later developed)

Edit: Forgot to mention the Alternative Minimum Tax (most itemized deuctions not allowed, no exemptions etc). Hard to see how he legitimately got to a bill of $2K on $200K income.

Edit #2: After thinking more, I'm gonna have to assume he used TurboTax and got tax advice help from Tim Geitner. :)

Fern

That Turbo tax is funny. Lets just say the things it did on my GFs taxes last year boggled the mind. :D
 
Sep 12, 2004
16,852
59
86
Although it's not that useful to argue over the exact definition of rich, Wikipedia says the top 5% of the income distribution starts only at $150,000. He's probably in the top 1%. It's reasonable to say that he's rich by that standard. Obviously, we all know there are much richer people than that but still.
The problem is that there really is no standard so the term "rich" is a moving target that is vicariously bandied about.

The more interesting question is what he paid during the good years. Obviously it was more, but this is still a place where the middle class gets fucked again. Say a guy makes $50,000/year for two years and then is unemployed for one year. He's paying the 50k tax bracket for two years and does not get to discount his year of no income. Meanwhile if you have investment income you're allowed to offset. A bit backwards if you ask me.
I don't know a single person in the middle class who, if they are smart with their money, can't eventually become rich. The problem is the "gotta have it all right fucking now" mentality that pervades our society so instead of buying a Kia and an affordable 3/2 people are buying a Lexus, a Corvette, and a McMansion they can barely afford.

I'm tired of hearing about a middle class getting fucked. Most in the middle class fuck themselves. In fact, if it wasn't for the middle class over-reaching this country probably wouldn't be in the economic situation we are in right now.
 

Genx87

Lifer
Apr 8, 2002
41,091
513
126
I'm not saying it's the way we should go there (in fact I think we need to stay away from deductions and complicated systems) but you could have it set up so that being unemployed in your third year entitles you to a rebate from your previous two years. I agree that we want to incentivize investing but at the end of the day you can also argue that we should incentivize income and spending too. The middle class and poor spend more of their income on things that drive the economy too. I think we both agree that taxation of any kind except for things like vices is ugly, but we have to do it.

How can we improve? Again, let's simplify things. Maybe these local bonds should be taxable. Yes it will deprive local governments of cheap money but there is just too much going on in the tax code right now. I'm pretty much in favor of a flat tax with some progressive rate differences included.

I am all for simplifying the system. I am for a national sales tax with prebates to make it progressive. We shouldnt need professionals to do our effing taxes.
 

marsspirit123

Member
May 31, 2009
32
0
0
So what is the state tax ,city tax ,county tax , sales tax , permits for this and that,property taxes ,car registartion,car window stickers,health insurance ,dental insurance ,401(k), HSA, an so on ?Isn't that e tax ? Shifting the federal tax into other form of taxes is what kills americans that aren't rich.Because all this other taxes are not % of your income .
This pointing on just federal tax is not good .I still want to see how much does average american pay on all taxes together as % of average american income.Then how much does millionaire pay as % of his income .I am sure that the millionaire pays less if you sum up all the taxes .And that is what matters, how much one have left after all taxes together.

Don't forget the part in the article where it states 45% of America pays no tax.

Everyone who can work should pay a percentage of their income to tax - no matter how little.

There may be a lot of rich guys paying little tax but there is a heck of a lot more regular guys paying NO TAX!