Nearly half of US households escape fed income tax

[thesyntaxera]

http://www.newsvine.com/_news/2010/04/07/4127805-nearly-half-of-us-households-escape-fed-income-tax

Something about this doesn't seem accurate, or is it just me?

[Tsukasa Buddha]

It's true. I was surprised that my parents, who are very much above poverty, paid nothing, mostly because of rebates.

Of course, they pay plenty of other taxes.

[thesyntaxera]

It's true. I was surprised that my parents, who are very much above poverty, paid nothing, mostly because of rebates.

Of course, they pay plenty of other taxes.

When you say "plenty of other taxes" what are you refering to? Just sales tax, and property tax...etc?

[Puppycow]

Sales tax, property tax, payroll tax if they work for an employer.
Tariffs, fuel taxes. Other stuff.

In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center.

In 2008, President George W. Bush signed a law providing most families with rebate checks of $300 to $1,200. Last year, Obama signed the economic recovery law that expanded some tax credits and created others. Most targeted low- and middle-income families.

Obama's Making Work Pay credit provides as much as $800 to couples and $400 to individuals. The expanded child tax credit provides $1,000 for each child under 17. The Earned Income Tax Credit provides up to $5,657 to low-income families with at least three children.

There are also tax credits for college expenses, buying a new home and upgrading an existing home with energy-efficient doors, windows, furnaces and other appliances. Many of the credits are refundable, meaning if the credits exceed the amount of income taxes owed, the taxpayer gets a payment from the government for the difference.

[daenku32]

Our household escapes Federal Income Tax. We have for the past three years.

College tuition is a "wonderful" thing.

[NewtonTrino]

Keep in mind that they are including social security tax which is basically 15% off the top (employer pays half). So to say these people are paying zero tax is only true if you don't consider social security "tax".

[daenku32]

This is a result of vast income disparity in the country. Average household income $50,000. If a couple makes $200,000, which is at maybe top 3%, it means that after they pay the same expenses that the $50,000/year household pays it still leaves them with amount of money that is many times the median households income.

If the incomes were flatter the tax base would be broader as well.

[billw]

Easy enough, if you're unemployed, and making COBRA payments. For the first time, in over 30 years of filing income tax returns, our itemized deductions are now roughly equal to our gross income.

[Skeptic Ginger]

Keep in mind that they are including social security tax which is basically 15% off the top (employer pays half). So to say these people are paying zero tax is only true if you don't consider social security "tax".It's mind bogglingly ignorant when the right wing and/or Libertarian leaning forum members carry on all these discussions of income taxes as if that was THE tax that reveals who pays and who the money is then 'unfairly' 'redistributed to'.

It's total denial of any evidence that might contradict the underlying beliefs of these people [not naming any names].

[thesyntaxera]

It's mind bogglingly ignorant when the right wing and/or Libertarian leaning forum members carry on all these discussions of income taxes as if that was THE tax that reveals who pays and who the money is then 'unfairly' 'redistributed to'.

It's total denial of any evidence that might contradict the underlying beliefs of these people [not naming any names].

I agree. Without getting into all that too deeply I do think it's a bit interesting that people complain about being "taxed enough already" without being all that specific about which taxes they are complaining about. The only argument I can see from that side is the fairness one, which is already being discussed here. Why they can't see that those that earn much lower wages shouldn't carry as big of an income tax burden is beyond me. Maybe taxes touched them in a naughty place, or something?

[Bikewer]

Much my thinking as well. If a significant portion of the populace ends up paying no income tax, and even gets a rebate....The claim that we are "overtaxed" is rather weak.

We earn right around 50,000, and have always gotten a fairly generous refund. With the little perks thrown in this year, it was generous indeed...New flatscreen TV, new lounge chair for the wife...etc.
We know that most of the other industrialized nations tax their citizens considerably more, yet at the same time manage in most cases to provide health care and other services....

[NewtonTrino]

Where's the outrage about the insane amount of military spending? We could pay for healthcare for everyone with a fairly small portion of the military budget.

[Neally]

Where's the outrage about the insane amount of military spending? We could pay for healthcare for everyone with a fairly small portion of the military budget.Not from the numbers I've seen. Defense spending works out to be $6,071 per household per year. Say you cut that in half. That gives $3K per household for health care. Say just 3 people per household. $1000 per year per person. I don't think so.

[Metullus]

I have just completed doing my mother's income taxes. She was widowed in 1994 and passed away this past Christmas. Her entire income came from my dad's military retirement and Social Security. Her Federal income taxes for 2009 came to a little over $7300.

Something a little screwy that a retiree on a fixed pension pays more income tax than 50% of the country...

[thesyntaxera]

Not from the numbers I've seen. Defense spending works out to be $6,071 per household per year. Say you cut that in half. That gives $3K per household for health care. Say just 3 people per household. $1000 per year per person. I don't think so.

Do you have a link to the numbers you have seen?

Where's the outrage about the insane amount of military spending? We could pay for healthcare for everyone with a fairly small portion of the military budget.

That's what I'm sayin! 490 billion is a bit much. The next highest spender is France I think, at 70 billion.

[NewtonTrino]

Not from the numbers I've seen. Defense spending works out to be $6,071 per household per year. Say you cut that in half. That gives $3K per household for health care. Say just 3 people per household. $1000 per year per person. I don't think so.

It's called hyperbole. Technically, of course, you're correct.

The military budget is still nuts though.

[Neally]

Do you have a link to the numbers you have seen?
http://www.tampabay.com/opinion/columns/washington-will-spend-31406-per-household-this-year/1086283

[thesyntaxera]

http://www.tampabay.com/opinion/columns/washington-will-spend-31406-per-household-this-year/1086283

Thanks!

[Skeptic Ginger]

I have just completed doing my mother's income taxes. She was widowed in 1994 and passed away this past Christmas. Her entire income came from my dad's military retirement and Social Security. Her Federal income taxes for 2009 came to a little over $7300.

Something a little screwy that a retiree on a fixed pension pays more income tax than 50% of the country...Yeah, like you are ignoring a good chunk of taxes collected which are not "income" taxes. :rolleyes:

And, just how much was that "fixed income"? Did she own her house, free from mortgage? Did she have any other assets?

[thaiboxerken]

Why are the tea baggers complaining so much then?

[Dr. Keith]

Much my thinking as well. If a significant portion of the populace ends up paying no income tax, and even gets a rebate....The claim that we are "overtaxed" is rather weak.

Let's just return to the rates under the Great One. I think we can all agree that the economy was better in the Reagan years, let's return to those low tax rates and stop the bickering.

/snark

[fishbob]

Why are the tea baggers complaining so much then?

If you listen to their rhetoric for any length of time, the answer is fairly obvious.

They are a bunch of low-information whiners.

[Metullus]

Yeah, like you are ignoring a good chunk of taxes collected which are not "income" taxes. :rolleyes:I am pretty sure that she was not exempt from those other taxes so I suppose you could add them to the tally...

And, just how much was that "fixed income"? Did she own her house, free from mortgage? Did she have any other assets?Her only income was from SS and my dad's Army pension - and her SS was reduced because of the pension - not a great deal of money. She did own her home outright.

[Skeptic Ginger]

I am pretty sure that she was not exempt from those other taxes so I suppose you could add them to the tally...

Her only income was from SS and my dad's Army pension - and her SS was reduced because of the pension - not a great deal of money. She did own her home outright.So she likely used the standard deduction for taxes. It's higher if you are over 65. Head of household standard deduction, in 2009: $8350 + $1400 for single head of household over 65. From the tax table, single head of household that paid 7300 in taxes made almost $50,000 after the standard deduction.

So the poor widow on the fixed income (no offense to you mother intended) you are describing made a little under $60,000 and had no mortgage payment. Her income tax amounted to about 12% of her income.

Feel free to correct me if I figured something wrong here since I'm guessing and it doesn't fit with what you've described as "not a great deal of money".

[Skeptic Ginger]

The sad thing in this thread is leaving out the part that many of those people who owed no income taxes must have made less than about $10,000/ year. That isn't enough to live on.

[TraneWreck]

I literally just read this before seeing the discussion here:

http://voices.washingtonpost.com/ezra-klein/2010/04/do_the_poor_really_pay_no_taxe.html

Article after the video.

The graph is a powerful one, indeed. It always amazes me that when it comes to hand-wringing about taxes people only mention the icome tax. I'm sure it has NOTHING to do with it being the most progressive form of taxation...

Edit: my favorite bit of ironic info I learned from that article was that Milton Friedman was the intellectual father of the Earned Income tax Credit, and that Richard Nixon signed it into law. But now it's SOCIALISM!!!!!

[Metullus]

So she likely used the standard deduction for taxes. It's higher if you are over 65. Head of household standard deduction, in 2009: $8350 + $1400 for single head of household over 65. From the tax table, single head of household that paid 7300 in taxes made almost $50,000 after the standard deduction.

So the poor widow on the fixed income (no offense to you mother intended) you are describing made a little under $60,000 and had no mortgage payment. Her income tax amounted to about 12% of her income.

Feel free to correct me if I figured something wrong here since I'm guessing and it doesn't fit with what you've described as "not a great deal of money".Gross about $54,000.00, which is, in many places, not a great deal of money.

The "poor widow", a description which is entirely yours and not mine, was not poor; indeed she was reasonably comfortable. I did not suggest otherwise. I merely pointed out that she paid more in Federal Income Taxes than about 50% of households. I was surprised.

[jhunter1163]

Between myself and Mrs. JHunter1163, we earned about $80K last year. We got a refund of about $1100, which is less than we've gotten in the past, but still welcome.

Just to be clear, getting a refund doesn't mean that you aren't paying income tax; it just means that the amount withheld from your paycheck exceeds the amount of tax you owe.

I'm surprised at the premise in the OP: I have a hard time believing that HALF of all households pay no federal income tax at all. I might be wrong though, wouldn't be the first time.

[NewtonTrino]

I'm surprised at the premise in the OP: I have a hard time believing that HALF of all households pay no federal income tax at all. I might be wrong though, wouldn't be the first time.

The numbers are accurate if you don't include Social Security and other payroll taxes.

If you are an "average" family of four making $50k you will have deductions for mortgage interest, children etc. that dramatically reduce your income tax burden but not your payroll tax burden.

[thesyntaxera]

http://www.thedailyshow.com/full-episodes/tue-april-13-2010-rachel-maddow

Stewart covered this a bit in his opening segment last night. I loved the bit about the children of the wealthy running off to defend our freedom.

Originally Posted by jhunter1163
I'm surprised at the premise in the OP: I have a hard time believing that HALF of all households pay no federal income tax at all. I might be wrong though, wouldn't be the first time.

Why is that surprising? I was curious to know why the alarm bells were going off over this massive oversimplification. Thanks for the replies.

[Bob Klase]

I have just completed doing my mother's income taxes. She was widowed in 1994 and passed away this past Christmas. Her entire income came from my dad's military retirement and Social Security.

Something a little screwy that a retiree on a fixed pension pays more income tax than 50% of the country...

Neither military retirement nor Social Security are "fixed pensions". Calling them 'fixed' merely shows that you don't understand the term.

[Bob Klase]

We earn right around 50,000, and have always gotten a fairly generous refund.

Do you thank the government for being so "generous"?

[NewtonTrino]

I don't want to post how much I made because I'll get yelled at.

[jhunter1163]

The article linked in the OP says that 38 percent of households paid no taxes in 2007, which is more in line with what I thought the number would be. Apparently, there have been new tax credits introduced since then, and expansions of existing ones. None of which applied to me personally, so I didn't know about them. Color me educated by the forum. :D

[Skeptic Ginger]

Gross about $54,000.00, which is, in many places, not a great deal of money.

The "poor widow", a description which is entirely yours and not mine, was not poor; indeed she was reasonably comfortable. I did not suggest otherwise. I merely pointed out that she paid more in Federal Income Taxes than about 50% of households. I was surprised.So perhaps I didn't get your point. Are you surprised half the country is that poor? Or are you suggesting being poor is exaggerated by many of the people who didn't pay those taxes and there must be a lot of freeloaders there?

[NewtonTrino]

So perhaps I didn't get your point. Are you surprised half the country is that poor? Or are you suggesting being poor is exaggerated by many of the people who didn't pay those taxes and there must be a lot of freeloaders there?

It's not that they are poorer than her it's that they have a lot more tax breaks. If you have children, tax break. Mortgage? Tax break. Etc. There are plenty of people who made more than grandma and paid less in taxes.

[TraneWreck]

Let me link this graph again:

http://voices.washingtonpost.com/ezra-klein/Is%20-Tax%20Day-%20Too%20Burdensome%20for%20the%20Rich-%20-%20Powered%20by%20Google%20Docs_1271267556720.jpeg

Notice that at every level of income, the amount of taxes paid is closely related to the amount of income. The biggest differential is the lowest 20% of earners, and they pay around 1% less in taxes than their share of income.

Anyone who complains about tax distribution being unfair (in the sense that the wealthy pay for everyone else) is wrong.

[NewtonTrino]

Let me link this graph again:

http://voices.washingtonpost.com/ezra-klein/Is%20-Tax%20Day-%20Too%20Burdensome%20for%20the%20Rich-%20-%20Powered%20by%20Google%20Docs_1271267556720.jpeg

Notice that at every level of income, the amount of taxes paid is closely related to the amount of income. The biggest differential is the lowest 20% of earners, and they pay around 1% less in taxes than their share of income.

Anyone who complains about tax distribution being unfair (in the sense that the wealthy pay for everyone else) is wrong.

I'm not wrong. I contribute more. Not as a percentage but in absolute terms. Without my contribution and others in the top few percent the budget would collapse. Considering an equal percentage to be an equal contribution is just silly. Now you can argue all you want that it should be looked at as a percentage but it's definitely *not* an equal contribution.

[TraneWreck]

I'm not wrong. I contribute more. Not as a percentage but in absolute terms. Without my contribution and others in the top few percent the budget would collapse. Considering an equal percentage to be an equal contribution is just silly. Now you can argue all you want that it should be looked at as a percentage but it's definitely *not* an equal contribution.

It's an equal number with respect to your income. You aren't picking up the slack for anyone, you're just paying your fair share.

Can you provide a sensible argument for why we should use anything other than percent?

Edit: By the way, without you someone else would be making your salary. Unless you're the guy that invented the iPad, chances are there's someone more than capable of doing your job. And I say that as a lawyer. THere's someone who would hop right in for me, even though I'm good at my job.

[Tsukasa Buddha]

Let me link this graph again:

http://voices.washingtonpost.com/ezra-klein/Is%20-Tax%20Day-%20Too%20Burdensome%20for%20the%20Rich-%20-%20Powered%20by%20Google%20Docs_1271267556720.jpeg

Notice that at every level of income, the amount of taxes paid is closely related to the amount of income. The biggest differential is the lowest 20% of earners, and they pay around 1% less in taxes than their share of income.

Anyone who complains about tax distribution being unfair (in the sense that the wealthy pay for everyone else) is wrong.

Interesting. But what taxes are covered in that graph? Like does total income mean that it includes capital gains and that stuff? And does total taxes include the regressive taxes like sales and property?

[TraneWreck]

Interesting. But what taxes are covered in that graph? Like does total income mean that it includes capital gains and that stuff? And does total taxes include the regressive taxes like sales and property?

Here's the article I took the graph from, I linked it earlier:

http://voices.washingtonpost.com/ezra-klein/2010/04/do_the_poor_really_pay_no_taxe.html

It says the taxes include "income taxes, payroll taxes, state and local taxes, capital gains taxes, and so forth..."

There's a pdf link in the article to the study that the graph came from.

[Tsukasa Buddha]

Here's the article I took the graph from, I linked it earlier:

http://voices.washingtonpost.com/ezra-klein/2010/04/do_the_poor_really_pay_no_taxe.html

It says the taxes include "income taxes, payroll taxes, state and local taxes, capital gains taxes, and so forth..."

There's a pdf link in the article to the study that the graph came from.

Cool, thanks.

[Skeptic Ginger]

It's not that they are poorer than her it's that they have a lot more tax breaks. If you have children, tax break. Mortgage? Tax break. Etc. There are plenty of people who made more than grandma and paid less in taxes.Are you sure that is what accounts for much of the difference and not lower income?

If this Wiki graph (http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg) is correct, half the households in the country earn less than $60K.

Of course there are cheaters. See my next post.

[NewtonTrino]

It's an equal number with respect to your income. You aren't picking up the slack for anyone, you're just paying your fair share.

Can you provide a sensible argument for why we should use anything other than percent?

It's not arguable that if you are paying more you are contributing more.

Percent can be applied to a discussion about contribution RELATIVE to income. But it certainly has nothing to do with who's actually paying the bills.



Edit: By the way, without you someone else would be making your salary. Unless you're the guy that invented the iPad, chances are there's someone more than capable of doing your job. And I say that as a lawyer. THere's someone who would hop right in for me, even though I'm good at my job.

I would love you to find someone to do my job for me so I can retire ;)

Let's see. I do product design (similar to your iPad thing), business development, manage 2 dev teams, work on marketing strategy, write code, read and approve contracts (working with external lawyers), negotiate salaries and hire/fire people (plus a lot of other stuff like external consulting for our biggest clients who want me present). Most of my income isn't in salary (I don't even have the highest salary in the company) but comes from bonuses based on profitability. Profitability is directly based on the quality of decisions I make.

[NewtonTrino]

Are you sure that is what accounts for much of the difference and not lower income?

If this Wiki graph (http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg) is correct, half the households in the country earn less than $60K.

Of course there are cheaters. See my next post.

Nope, not sure. That one was off the cuff. I'll believe any real stats you have.

[Skeptic Ginger]

Always we hear the complaints that the poor don't pay enough income tax, and all the rich people who created their wealth (not the result of redistribution from anyone :rolleyes: ) are unfairly burdened to pay an unfair share.

How many threads are there in this forum complaining about all the off shore accounts the rich hide large portions of their income in?

You want something to be outraged by? Try this situation, and while you're at it, take the time to encourage Obama to grant clemency after the injustice here: Jailed UBS Whistleblower Bradley Birkenfeld Makes Tax Day Clemency Request to President Obama (http://www.democracynow.org/2010/4/15/ubs)STEPHEN KOHN: ...Nineteen thousand American millionaires and billionaires had these offshore accounts. You had to be very wealthy to set one of these up. The government created an amnesty program, so if you voluntarily turned yourself in, you escaped any prosecution and even public exposure. No one would even know who you were. On the other hand, to Mr. Birkenfeld, who didn’t even have an account, Mr. Birkenfeld, who turned it in, he was sentenced to prison and was not offered immunity. ...

...In terms of the other bankers who they caught, they were let go, with no jail time or maybe just detained for a week or two. In terms of people who owned these secret accounts but were caught, they were given probation. The billionaire, his largest client, with $200 million in illegal accounts: probation. Mr. Birkenfeld, who the government admits was the reason why all of these illegal shenanigans were uncovered, the government admits it was his information that recouped $780 million in fines, and the government admits that it was his allegations that have driven about $3 to $5 billion in payments of back taxes—yet he’s the one who they put into prison. ...

... When the Senate investigated Birkenfeld’s allegations and conducted a full review of illegal offshore accounts, they estimated that there was $3 to $5 trillion of United States assets in offshore accounts. The UBS scheme that Birkenfeld turned in was $20 billion. The Senate estimated that there was a minimum of $100 billion lost per year by these illegal accounts....

... The problem with these secret accounts is a lot worse than just US taxpayers losing money. These accounts are used by corrupt politicians to put their bribe money. They’re used by officials in developing countries to put illegally stolen development funds, money stolen from food programs, education programs. Who puts money into these illegal accounts? How are they misused? The scandal exposed by Mr. Birkenfeld—and keep in mind, he was the first major banker ever in world history to take information from these top-secret foreign accounts and give them to the government for prosecution. How was he treated? That’s the message.



**I am posting this same information in 2 threads.

[NewtonTrino]

Always we hear the complaints that the poor don't pay enough income tax, and all the rich people who created their wealth (not the result of redistribution from anyone :rolleyes: ) are unfairly burdened to pay an unfair share.


I created my own wealth. Sorry if you don't like it but there it is. Keep in mind I immigrated to this country with nothing but a suitcase (and it wasn't full of cash!).



How many threads are there in this forum complaining about all the off shore accounts the rich hide large portions of their income in?

You want something to be outraged by? Try this situation, and while you're at it, take the time to encourage Obama to grant clemency after the injustice here: Jailed UBS Whistleblower Bradley Birkenfeld Makes Tax Day Clemency Request to President Obama (http://www.democracynow.org/2010/4/15/ubs)

**I am posting this same information in 2 threads.

I pay my taxes so I say go after these bastards with the full resources of the law.

[Skeptic Ginger]

I created my own wealth. Sorry if you don't like it but there it is. Keep in mind I immigrated to this country with nothing but a suitcase (and it wasn't full of cash!).I created mine as well. I sell my expertise.

That wasn't the point. A very large number of millionaires and billionaires got rich by taking their wealth from others. Look at the small number of people who cashed in on the bank failures and related means of bilking people out of their assets. These people while few in numbers, took billions collectively from many.

Yet one frequently hears the denial of this fact by people who profess or are simply persuaded by the argument, rich people create wealth and create jobs. This is the rationalization for ignoring the recent sharp rise in wealth concentrated in the hands of the top 1 percentile of the income population and the growing numbers in the lower income ranks. In other words, fewer people at the top hold more wealth individually while many more people at the bottom hold less per person. This is the classic concentration of wealth that makes an unhealthy economy.

So if you are rich and you pay a larger share of the tax burden than a poor person, that is redistribution of wealth. If you are rich and you cash in on the bank bailouts because your money buys government influence that let the bubble grow and burst, that is "creating wealth" not redistributing it. :rolleyes:

[TraneWreck]

It's not arguable that if you are paying more you are contributing more.

Percent can be applied to a discussion about contribution RELATIVE to income. But it certainly has nothing to do with who's actually paying the bills.

Look, it's a trivial point, obviously the raw numbers as are they are. The question is whether the system is just. Your income group pays the same share of taxes as you have a share of the income. At worst, that's fair.




I would love you to find someone to do my job for me so I can retire ;)

Let's see. I do product design (similar to your iPad thing), business development, manage 2 dev teams, work on marketing strategy, write code, read and approve contracts (working with external lawyers), negotiate salaries and hire/fire people (plus a lot of other stuff like external consulting for our biggest clients who want me present). Most of my income isn't in salary (I don't even have the highest salary in the company) but comes from bonuses based on profitability. Profitability is directly based on the quality of decisions I make.

And if your company ceased to exist, another one would take its place. You've confused your dedicated, essential work in your company with an inability to replace your economic productivity. I don't doubt you're very good at what you do, but what do you honestly think the effect on the economy would be if you quit tomorrow?

Your clients would just move on.

And please, don't read that as a personal attack, like I say, I have no doubt you're success is based on superior ability, but we're all more replaceable than we'd like to imagine.

[NewtonTrino]

Look, it's a trivial point, obviously the raw numbers as are they are. The question is whether the system is just. Your income group pays the same share of taxes as you have a share of the income. At worst, that's fair.

I agree it's a trivial point.





And if your company ceased to exist, another one would take its place. You've confused your dedicated, essential work in your company with an inability to replace your economic productivity. I don't doubt you're very good at what you do, but what do you honestly think the effect on the economy would be if you quit tomorrow?

Your clients would just move on.

And please, don't read that as a personal attack, like I say, I have no doubt you're success is based on superior ability, but we're all more replaceable than we'd like to imagine.

Of course I'm only a small part, I get what you're saying.

[Andrew Wiggin]

I'm getting a refund this year, but a lot less than I payed in. I just have my withholding set to take a bit much so I don't have to worry about a big lump sum at the end. Oddly enough in the current political climate, I don't mind paying taxes. I'm making enough to live a more than comfortable life, and paying my share of all the services I recieve doesn't bother me. There's a guy in a trailer out on the highway near here who has his entire yard and most of his house covered with 'Taxed Enough Already' signs and banners. In the current climate, given the trailer, dead cars in the yard, and no signs of productive activity I wonder if he's actually taxed at all, which makes the level of complaining rather inane.

A

[WildCat]

Where's the outrage about the insane amount of military spending? We could pay for healthcare for everyone with a fairly small portion of the military budget.
No.

Take the entire miltary budget an put it into health care, and you get about 2-3 months of health care.

[WildCat]

I have just completed doing my mother's income taxes. She was widowed in 1994 and passed away this past Christmas. Her entire income came from my dad's military retirement and Social Security. Her Federal income taxes for 2009 came to a little over $7300.

Something a little screwy that a retiree on a fixed pension pays more income tax than 50% of the country...
Retirees have paid off their homes and student loans and the kids are long past the age of dependency, and thus don't have many deductions aside from local property tax.

[WildCat]

It's not that they are poorer than her it's that they have a lot more tax breaks. If you have children, tax break. Mortgage? Tax break. Etc. There are plenty of people who made more than grandma and paid less in taxes.
Didn't grandma also get those tax breaks when she qualified for them?

[shawmutt]

I got more than I had witheld this year, at least in federal. Married, two toddlers, my wife and I continuing education, monster mortgage interest, along with a couple other deductions.

I still have to pay out the rear in local and property taxes, plus all the sales tax that is generated from a four-person household.

Boy, don't I feel lucky to not have federal taxes!

[NewtonTrino]

Didn't grandma also get those tax breaks when she qualified for them?

I'm sure she did. I was just explaining the situation not trying to make it sound like grandma is getting ripped off.

[Skeptic Ginger]

No.

Take the entire miltary budget an put it into health care, and you get about 2-3 months of health care.That's bull. Even if you take the government's pie chart, defense is 20% and Medicare/Medicaid is 33%. (See the lower pie chart in the link below.)

But these folks have a different view of what to count in that pie chart so even the above claims are questioned:

Where your income tax money really goes (http://www.warresisters.org/pages/piechart.htm)


I'm sure there are less biased sources than the above. Go ahead and find us one that says military spending is such a small fraction of the budget and let's take a look at it.

[WildCat]

That's bull.
No, it's not bull. $2.4 trillion is the number I see quoted a lot for US health care annually.

That's 4x the total defense budget.

[Skeptic Ginger]

No, it's not bull. $2.4 trillion is the number I see quoted a lot for US health care annually.

That's 4x the total defense budget.The number you see? Where? Are you talking about government spending on health care or the private spending on health care?

It would help if you cited a source once in a while to save us all the step of asking you for one.

[Vorticity]

The number you see? Where? Are you talking about government spending on health care or the private spending on health care?

It would help if you cited a source once in a while to save us all the step of asking you for one.

Numbers:

This (http://en.wikipedia.org/wiki/Health_care_in_the_United_States#Health_care_spend ing) wiki link places total health care spending in the US at 16% of the GDP. This includes all health care spending: Government + Private. It seems to me that this is the relevant number to look at.

This (http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Military_budg et_and_total_US_federal_spending) wiki link places US government military spending for FY 2010 at 4.7 % of the GDP.

(4.7% / 16%) x 12 months = ~3.5 months.

[NewtonTrino]

Numbers:

This (http://en.wikipedia.org/wiki/Health_care_in_the_United_States#Health_care_spend ing) wiki link places total health care spending in the US at 16% of the GDP. This includes all health care spending: Government + Private. It seems to me that this is the relevant number to look at.

This (http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Military_budg et_and_total_US_federal_spending) wiki link places US government military spending for FY 2010 at 4.7 % of the GDP.

(4.7% / 16%) x 12 months = ~3.5 months.

The question is whether or not you include interest payments on debt that was military spending.

Also the US spends way too much on healthcare. Our system is pretty messed up. I have great insurance (the best I can buy literally) and it still sucks.

[Skeptic Ginger]

Numbers:

This (http://en.wikipedia.org/wiki/Health_care_in_the_United_States#Health_care_spend ing) wiki link places total health care spending in the US at 16% of the GDP. This includes all health care spending: Government + Private. It seems to me that this is the relevant number to look at.

This (http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Military_budg et_and_total_US_federal_spending) wiki link places US government military spending for FY 2010 at 4.7 % of the GDP.

(4.7% / 16%) x 12 months = ~3.5 months.So we should compare apples and oranges here? Huh?

The conversation was about taxes spent on health care, not % of GDP spent on health care.

[Iamme]

Yeah, like you are ignoring a good chunk of taxes collected which are not "income" taxes. :rolleyes:

And, just how much was that "fixed income"? Did she own her house, free from mortgage? Did she have any other assets?

Income tax is not assessed on "assets".

[Iamme]

I have just completed doing my mother's income taxes. She was widowed in 1994 and passed away this past Christmas. Her entire income came from my dad's military retirement and Social Security. Her Federal income taxes for 2009 came to a little over $7300.

Something a little screwy that a retiree on a fixed pension pays more income tax than 50% of the country...

Either that pension and S.S. is a lot of money per year, or she forgot to take deductions she is entitled to.

For the fun of it, I am going to look up $7300 for single, under the taxable income section, to find out what the taxable income claimed was. Or was State income tax also included in that figure?

[Iamme]

So she likely used the standard deduction for taxes. It's higher if you are over 65. Head of household standard deduction, in 2009: $8350 + $1400 for single head of household over 65. From the tax table, single head of household that paid 7300 in taxes made almost $50,000 after the standard deduction.

So the poor widow on the fixed income (no offense to you mother intended) you are describing made a little under $60,000 and had no mortgage payment. Her income tax amounted to about 12% of her income.

Feel free to correct me if I figured something wrong here since I'm guessing and it doesn't fit with what you've described as "not a great deal of money".

Ah. Somebody spoiled my party tonight. I could live like a king on $60K less the $7300.

[Iamme]

The sad thing in this thread is leaving out the part that many of those people who owed no income taxes must have made less than about $10,000/ year. That isn't enough to live on.

That isn't enough to live on even if you have no debts. Take it from me.

And what I mean by that lies in the word "live". If you have to sit at home, not drive anywhere, eat mac n cheese and no tv/cable/ satellite, no frivolus purchases like DVD's, no fast food ever...etc., you might become suicidal. Yes, you could survive on less than $10,000, but the feelings of suicide might creep in, for some, at least.

[NewtonTrino]

I lived on less than $10,000 a year for a while. Honestly it wasn't that bad because I had roomies to help with the rent. We would cook for each other to save money as well. I did eat a lot of spaghetti and macaroni etc. I went grocery shopping on my bicycle (car was out of the question) and took the bus when I needed to go further afield. Anyway for a single guy it was doable back then. For a family that would be really tough.

[daenku32]

Honestly it wasn't that bad because I had roomies to help with the rent.

When I entered the work force I did the same thing. Of course it meant we were breaking the rules of the lease. Apparently having 4 or 5 guys living in a 2 bedroom apartment wasn't kosher with the property owners.

[MikeMangum]

Are you sure that is what accounts for much of the difference and not lower income?

If this Wiki graph (http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg) is correct, half the households in the country earn less than $60K.

Of course there are cheaters. See my next post.

You don't need to eyeball a graph, there is a number that, by definition, tells us what the median (http://en.wikipedia.org/wiki/Median_household_income) point happens to be.

If your argument is that half of the population pays no income tax because they are so poor, and it happens to be, if not the wealthiest, one of the wealthiest countries in the history of the world...then I'm not convinced that our connotations of the word "poor" match very well.

It would be hard to argue that the bottom half of the population of the US is suffering from greater poverty than 50 years ago.
http://www.taxfoundation.org/UserFiles/Image/Fiscal%20Facts/Nonpayers%202006/ff-20060330.jpg

Notice that median income is measured in "real" (i.e., inflation adjusted) terms.
http://www.davemanuel.com/charts/median_household_income.gif

Keep in mind also that average household size has decreased (www.census.gov/population/socdemo/hh-fam/hh6.xls ) (Census Dept XLS) at the same time, which means that even if household incomes did not change, a decrease in household size means more income per person.

All of which, added together, belie the premise that half of the country doesn't pay any net income tax because they are so poor.

[drkitten]

You don't need to eyeball a graph, there is a number that, by definition, tells us what the median (http://en.wikipedia.org/wiki/Median_household_income) point happens to be.

If your argument is that half of the population pays no income tax because they are so poor, and it happens to be, if not the wealthiest, one of the wealthiest countries in the history of the world...then I'm not convinced that our connotations of the word "poor" match very well.

You're the one who introduced the word "poor" into the discussion.

In a wealthy country where nearly everyone can afford a television and a car, a progressive tax policy will still hit the people with cable and three cars harder. And in a country where there are enough people with cable and three cars that can afford the additional tax without substantial hardship,.... big deal.

Americans are, by and large, undertaxed by world standards.

The idea that, somehow, the upper end of the American income distribution should be still more undertaxed and that the lower end of American distribution should be less undertaxed (by world standards) doesn't seem intuitive or obvious to me.

[MikeMangum]

You're the one who introduced the word "poor" into the discussion.

Really?

The sad thing in this thread is leaving out the part that many of those people who owed no income taxes must have made less than about $10,000/ year. That isn't enough to live on.
Are you surprised half the country is that poor? Or are you suggesting being poor is exaggerated by many of the people who didn't pay those taxes and there must be a lot of freeloaders there?
Are you sure that is what accounts for much of the difference and not lower income?

[NewtonTrino]

The "poor" have decided that the rich are going to pay for everything and if you complain about paying 10x more in taxes you are just a rich whiner. Talking about this is pointless.

[iknownothing]

The "poor" have decided that the rich are going to pay for everything and if you complain about paying 10x more in taxes you are just a rich whiner. Talking about this is pointless.

Poor people just went and decided that all on their own and imposed it on the rest? In the real world here where money equals influence?

The tax code is the way it is because the majority of people over time have felt taxes should be progressive.

Seems like you're trying to paint rich people as victims here.

[TraneWreck]

The "poor" have decided that the rich are going to pay for everything and if you complain about paying 10x more in taxes you are just a rich whiner. Talking about this is pointless.

My heart is breaking for you. And you get NOTHING in return for that expense. All those damn poor people sopping up $2.5 billion of yearly subsidies in their oil companies, that $92 billion a year that pour into their companies like Boeing and Xerox, the $7 billion a year that go to large corporate farms, the vast sums of money we spend projecting military power so that poor people can safely establish factories in various countries throughout the world cutting labor costs...etc.

Those goddamn poor folks, just gouging the rich. And don't get me started on the tragedy of Goldman Sachs. The damn poor people tricking those bankers into giving them questionable mortgages...

[NewtonTrino]

See what I'm saying. We ain't getting any sympathy ;)

I personally think the system is unfair. My opinion is completely overwhelmed by everyone else in a democracy. Free speech means I can at least whine about it.

[NewtonTrino]

Poor people just went and decided that all on their own and imposed it on the rest? In the real world here where money equals influence?

The tax code is the way it is because the majority of people over time have felt taxes should be progressive.


Which is called the tyranny of the majority. I don't understand why the majority can impose it's will on the minority like that. In fact the original constitution was pretty clear that the riffraff didn't get to vote.


Seems like you're trying to paint rich people as victims here.

I don't know about the rich in general but I feel like I'm getting screwed, yes.

IMHO the government will suck up every dollar it can never stopping until we hit some sort of wall. I don't agree with the way they spend most of the money either.

Let me be clear that I'm a radical though as I think taxes should be voluntary. We've already gone down this road in another thread.

[TraneWreck]

See what I'm saying. We ain't getting any sympathy ;)

I personally think the system is unfair. My opinion is completely overwhelmed by everyone else in a democracy. Free speech means I can at least whine about it.

Fair enough. But then I get to link this in response:

k5ba1OKY7Xc

[NewtonTrino]

My heart is breaking for you. And you get NOTHING in return for that expense. All those damn poor people sopping up $2.5 billion of yearly subsidies in their oil companies, that $92 billion a year that pour into their companies like Boeing and Xerox, the $7 billion a year that go to large corporate farms, the vast sums of money we spend projecting military power so that poor people can safely establish factories in various countries throughout the world cutting labor costs...etc.


I agree. Cut all subsidies to these companies. I've also clearly stated that I think the military budget is obscene and should be drastically cut.


Those goddamn poor folks, just gouging the rich. And don't get me started on the tragedy of Goldman Sachs. The damn poor people tricking those bankers into giving them questionable mortgages...

Goldman Sachs is a small percentage of rich people and need to eat their own dogfood without bailouts. I'm just as against all this crap as you are.

[NewtonTrino]

Basically I object to the idea that "fair" means I pay a larger absolute amount AND a larger percentage. It's silly.

[MikeMangum]

Americans are, by and large, undertaxed by world standards.

Undertaxed? What exactly do you mean by undertaxed? That word implies (as opposed to saying that Americans pay less tax than some other countries) Americans pay less tax than they should.

http://www.ncpa.org/pdfs/st159.pdf

This study examines the internation growth rates for 103 countries between 1960 and 1980.

We find that:

On average, countries reach their maximum economic growth rates then they take no more than 19.3 percent of GDP in taxes.

The economic growth rate tends to reach zero and then become negative once taxes consume more than 45 percent of GDP/

The specific rates that maximize economic grwoth are an income tax rate of 11.9 percent, a sales tax rate of 4.6 percent and trade taxes equal to 9.4 percent.

http://www.olis.oecd.org/olis/2008doc.nsf/LinkTo/NT00003502/$FILE/JT03248896.PDF
This paper investigates the design of tax structures to promote economic growth. It suggests a “tax and growth” ranking of taxes, confirming results from earlier literature but providing a more detailed disaggregation of taxes. Corporate taxes are found to be most harmful for growth, followed by personal income taxes, and then consumption taxes.

http://www.nber.org/papers/w13756
We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points. Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy.

http://ideas.repec.org/p/nbr/nberwo/5826.html
Tax reforms are sometimes touted to have strong macroeconomic growth effects. We consider the impact of a major tax reform on the long-term growth rates of the U.S. economy using three approaches. The first approach is to examine the historical record of the U.S. economy to evaluate whether tax cuts have been associated with economic growth. The second is to consider the evidence on taxation and growth for a large sample of countries. And finally, we use evidence from micro-level studies of labor supply, investment demand, and productivity growth. Our results suggest modest effects, on the order of 0.2 to 0.3 percentage point differences in growth rates in response to a major tax reform that changes all marginal tax rates by 5 percentage points and average tax rates by 2.5 percentage points. Nevertheless, even such small effects can have a large cumulative impact on living standards.

http://www.britannica.com/bps/additionalcontent/18/31859202/STATE-INCOME-TAXES-AND-ECONOMIC-GROWTH
This article explores the impact of tax policy on economic growth in the states within the framework of an endogenous growth model. Regression analysis is used to estimate the impact of taxes on economic growth in the states from 1964 to 2004. The analysis reveals a significant negative impact of higher marginal tax rates on economic growth.

http://www.aiecon.org/advanced/suggestedreadings/PDF/sug334.pdf
Past theoretical work predicts that higher corporate tax rates should decrease economic growth rates, while the effects of high personal tax rates are less clear. In this paper, we explore how tax policies in fact affect a country’s growth rate, using cross-country data during 1970–1997. We find that statutory corporate tax rates are significantly negatively correlated with cross-sectional differences in average economic growth rates, controlling for various other determinants of economic growth, and other standard tax variables. In fixed-effect regressions, we again find that increases in corporate tax rates lead to lower future growth rates within countries. The coefficient estimates suggest that a cut in the corporate tax rate by 10 percentage points will raise the annual growth rate by one to two percentage points.

http://mailer.fsu.edu/~jgwartne/garnet-jgwartne/Documents/GwartneyLawsonSocialPhilosophyandPolicy.pdf
Regression 1 implies that, holding the other variables of the model constant, a 10 percentage point reduction in the top marginal rate is associated with approximately a 0.5 percentage point increase in long-term growth. The R-squared implies that the model represented by regression 1 accounts for 40 percent of the variation in the growth rate of GDP among the seventy-seven countries during 1990–2002.

http://www.ectap.ro/articole/317.pdf
Abstract. The analysis of the correlation between fiscal policy and economic growth represents an important and very debated topic in the theoretical and empirical literature. In this study we test the correlation between fiscal policy and economic growth in Romania, for the period 1990-2007. The correlation pattern between the real growth rate of the GDP and the categories of budgetary revenues reveals a link of negative causality between the economic growth and fiscal revenues.

http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V97-460M6X5-3&_user=10&_coverDate=09%2F30%2F2002&_rdoc=1&_fmt=high&_orig=search&_sort=d&_docanchor=&view=c&_searchStrId=1313631922&_rerunOrigin=google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=e4a500d96530d7ca799fb1ed2f80ba20
The paper compares the appropriateness and explanatory power of marginal tax rates, average tax rates and tax progressivity as measures of the impact of taxation on growth. Data are organized as a panel of 25 industrialized countries from 1970 to 1998. Contrary to previous empirical research, but consistently with theory, we find that marginal effective tax rates and tax progressivity have a negative influence on economic growth. This negative correlation turns out to be robust after controlling for state and policy variables.

For more studies: go here (http://www.heritage.org/Research/Reports/2005/03/Supplement-to-The-Impact-of-Government-Spending-on-Economic-Growth) and wander through the footnotes.

http://www.brusselsjournal.com/files/GwartneysLaw.gif

Yes, Amercians are undertaxed if the desired result is reduced economic growth for the US. There is a reason that the US has averaged long term growth rates significantly higher than those of Western Europe.

For a very good example of how lowering taxes can dramatically improve growth, read this (http://www.brusselsjournal.com/node/510).

[Bob Klase]

Basically I object to the idea that "fair" means I pay a larger absolute amount AND a larger percentage. It's silly.

I think it would be fair if you just had to pay a larger percentage then.

[NewtonTrino]

I think it would be fair if you just had to pay a larger percentage then.

And I think it would be fair if you had to pay the same amount I do in absolute terms. And if you don't pay we chuck your ass in jail. Fair's fair, right?

[NewtonTrino]

Yes, Amercians are undertaxed if the desired result is reduced economic growth for the US. There is a reason that the US has averaged long term growth rates significantly higher than those of Western Europe.

For a very good example of how lowering taxes can dramatically improve growth, read this (http://www.brusselsjournal.com/node/510).

If I was taxed less I would directly be able to hire more people.

[Bob Klase]

And I think it would be fair if you had to pay the same amount I do in absolute terms. And if you don't pay we chuck your ass in jail. Fair's fair, right?

If you want to be silly.

[lomiller]

If I was taxed less I would directly be able to hire more people.

But they would no longer be interested in working for what you would pay them due to their massively increased tax burden.

[Skeptical Greg]

Yeah, going from nothing to something would be a massive increase, alright..

[TraneWreck]

Here's some interesting information about the super-rich and taxes:

http://www.npr.org/blogs/money/2010/04/inside_the_returns_of_americas.html?ft=1&f=93559255

Notice that their average income skyrocketed through the 2000's. Also notice that the economy didn't do so well through that period. I guess the notion that simply allowing rich people to use their money as they see fit will stimulate the economy isn't so much true.

Also notice that the largest economic expansion in US history began with a tax increase on the wealthy, AKA Clinton's budget in 1994 that passed wihout a single Republican vote.

What I find Ironic is that folks like NewtonTrino (just singling you out because you've been making those arguments--nothing personal) think that their bottom line is harmed by higher taxes. In fact, ensuring that people lower down on the economic ladder have available funds INCREASES the financial opportunity of those at the top.

The economic Masters of the Universe were freed in the 2000's in a way not seen since before the Great Depression. How did that turn out for everyone?

[NewtonTrino]

But they would no longer be interested in working for what you would pay them due to their massively increased tax burden.

Doubtful because most of them are already taxed quite highly already. I pay extremely well because I only hire superstars.

[NewtonTrino]

Here's some interesting information about the super-rich and taxes:

http://www.npr.org/blogs/money/2010/04/inside_the_returns_of_americas.html?ft=1&f=93559255

Notice that their average income skyrocketed through the 2000's. Also notice that the economy didn't do so well through that period. I guess the notion that simply allowing rich people to use their money as they see fit will stimulate the economy isn't so much true.

Also notice that the largest economic expansion in US history began with a tax increase on the wealthy, AKA Clinton's budget in 1994 that passed wihout a single Republican vote.

What I find Ironic is that folks like NewtonTrino (just singling you out because you've been making those arguments--nothing personal) think that their bottom line is harmed by higher taxes. In fact, ensuring that people lower down on the economic ladder have available funds INCREASES the financial opportunity of those at the top.

The economic Masters of the Universe were freed in the 2000's in a way not seen since before the Great Depression. How did that turn out for everyone?

The super rich are a small minority of the people who are caught in the tax web. I'm not super rich by any means but I have a lower tax burden than them because I made my money as income not capital gains.

Also just because the rich are rich and getting richer doesn't imply that you need to redistribute their wealth. That's your opinion not a fact.

[TraneWreck]

The super rich are a small minority of the people who are caught in the tax web. I'm not super rich by any means but I have a lower tax burden than them because I made my money as income not capital gains.

Also just because the rich are rich and getting richer doesn't imply that you need to redistribute their wealth. That's your opinion not a fact.

In the 2000's taxes were cut and regulations removed on the super-wealthy. This is the sort of thing you want done to your income bracket. Instead of leading to an economic boom, we had a horrible decade that included a net job loss for the first time since the depression.

A bad economy benefits neither the wealthy nor the poor, only a handful of the richest Americans made out like bandits--and it turns out some number of them were almost literally bandits.

So take this thought experiment (it's a radical over-simplification, but it will suffice):

Let's say you make $1,000,000 and are taxed at 40%. You net $600,000. Now, let's say an increase in taxes of 5% on all members of your group will pay for nationalized health care. So now based on your salary you net $550,000.

But you own a business selling widgets. Now that no one in the nation, including you, has to pay for health care, your business saves money with respect to covering employees. Additionally, more people in the country have money to spend on your widgets.

Thus, that tax increase that cost you $50,000 will save you, say, $15,000 (meaning you only lost $35,000 from the tax icrease) a year in personal health care costs, an your business will make more money from health care savings and increased sales. Very easily the next year you could gross $1,200,000, meaning you net $660,000, an increase in money in your pocket directly as a result of an increase in your taxes.

Obviously the scenario is much hazier in the real world and takes longer than a year, but this is essentially what happened in the 90's. Everyone profited even though there was an increase in taxes on the wealthy.

[MikeMangum]

Notice that their average income skyrocketed through the 2000's. Also notice that the economy didn't do so well through that period. I guess the notion that simply allowing rich people to use their money as they see fit will stimulate the economy isn't so much true.

...

What I find Ironic is that folks like NewtonTrino (just singling you out because you've been making those arguments--nothing personal) think that their bottom line is harmed by higher taxes. In fact, ensuring that people lower down on the economic ladder have available funds INCREASES the financial opportunity of those at the top.

I guess you haven't fully read the thread. As opposed to simply asserting something, some people actually provide evidence (http://forums.randi.org/showthread.php?postid=5874102#post5874102).

Also notice that the largest economic expansion in US history began with a tax increase on the wealthy, AKA Clinton's budget in 1994 that passed wihout a single Republican vote.

Horsefeathers (http://www.heritage.org/Research/Reports/2008/03/Tax-Cuts-Not-the-Clinton-Tax-Hike-Produced-the-1990s-Boom).

ETA: I guess you don't remember the big fights (http://www.cnn.com/US/9512/budget/budget_battle/index.html) regarding the budget between Clinton and the Republican controlled Congress.

[lomiller]

Doubtful because most of them are already taxed quite highly already. I pay extremely well because I only hire superstars.

When entry level salaries go up then every one else wants more as well.

[NewtonTrino]

When entry level salaries go up then every one else wants more as well.

As long as the business is generating money I'll pay out as much as I can to employees. We don't have entry level positions though.

[NewtonTrino]

In the 2000's taxes were cut and regulations removed on the super-wealthy. This is the sort of thing you want done to your income bracket. Instead of leading to an economic boom, we had a horrible decade that included a net job loss for the first time since the depression.

A bad economy benefits neither the wealthy nor the poor, only a handful of the richest Americans made out like bandits--and it turns out some number of them were almost literally bandits.

So take this thought experiment (it's a radical over-simplification, but it will suffice):

Let's say you make $1,000,000 and are taxed at 40%. You net $600,000. Now, let's say an increase in taxes of 5% on all members of your group will pay for nationalized health care. So now based on your salary you net $550,000.

But you own a business selling widgets. Now that no one in the nation, including you, has to pay for health care, your business saves money with respect to covering employees. Additionally, more people in the country have money to spend on your widgets.

Thus, that tax increase that cost you $50,000 will save you, say, $15,000 (meaning you only lost $35,000 from the tax icrease) a year in personal health care costs, an your business will make more money from health care savings and increased sales. Very easily the next year you could gross $1,200,000, meaning you net $660,000, an increase in money in your pocket directly as a result of an increase in your taxes.

Obviously the scenario is much hazier in the real world and takes longer than a year, but this is essentially what happened in the 90's. Everyone profited even though there was an increase in taxes on the wealthy.

National health care would save me a six figure sum in health insurance every year. There's no way it could be done for 5% though.

Also the healthcare itself would be comparing apples to oranges.

[TraneWreck]

I guess you haven't fully read the thread. As opposed to simply asserting something, some people actually provide evidence (http://forums.randi.org/showthread.php?postid=5874102#post5874102).

Ah Irony. Why don't you wind your way back through this thread and see who has linked confirming evidence? You may be surprised at the result.


Horsefeathers (http://www.heritage.org/Research/Reports/2008/03/Tax-Cuts-Not-the-Clinton-Tax-Hike-Produced-the-1990s-Boom).

ETA: I guess you don't remember the big fights (http://www.cnn.com/US/9512/budget/budget_battle/index.html) regarding the budget between Clinton and the Republican controlled Congress.

Well, that was an interesting read. I guess that writer subscribes to the IMMEDIATE IMPACT version of economic analysis. Surely it couldn't be the case that the effect of the tax hike and Clinton's 1993 budget increased over time.

Then what changed between 1997 and the economic downturn in 2001? Another tax hike? Or did the '97 tax cuts and the de-inflation of the tech bubble do it?

[lomiller]

We don't have entry level positions though.

They will still want more money, probabaly a lot more. Oh, and you'd have to manage it with a lot less buisness comming in.

[NewtonTrino]

They will still want more money, probabaly a lot more. Oh, and you'd have to manage it with a lot less buisness comming in.

I'm not sure what you're trying to say here.

[MikeMangum]

Ah Irony. Why don't you wind your way back through this thread and see who has linked confirming evidence? You may be surprised at the result.

I must be blind, because I sure don't see you (or anyone else) posting links to evidence in support of the premise that raising taxes does not reduce economic growth.

All of the links so far in the thread, aside from my own:

Initial post to news story.
Post #18: link to news story about total spedning per family
Post #26: link to an editorial by Ezra Klein about tax burden relative to income
Post #30: link to Rachel Maddow show
Post #43: link to graph of income distribution
Post #46: link to news story about UBS whistleblower
Post #57: link to anti-war site about where tax money is spent using crazy assumptions
Post #60: wiki link about healthcare spending, wiki link about US military budget
Post #77: link to Monty Python video
Post #87: link to editorial comparing changes in increases (in nominal terms) of the income of the wealthy and making comparisons to changes in tax rates, all while ignoring nominal increases in taxes paid. (Usually, you want to compare apples to apples)

No more links before the money quote:

What I find Ironic is that folks...think that their bottom line is harmed by higher taxes. In fact, ensuring that people lower down on the economic ladder have available funds INCREASES the financial opportunity of those at the top.

Where exactly is the evidentiary external link I'm supposed to look for that supports the assertion that increasing taxes don't retard economic growth?

[MikeMangum]

Well, that was an interesting read. I guess that writer subscribes to the IMMEDIATE IMPACT version of economic analysis. Surely it couldn't be the case that the effect of the tax hike and Clinton's 1993 budget increased over time.

Then what changed between 1997 and the economic downturn in 2001? Another tax hike? Or did the '97 tax cuts and the de-inflation of the tech bubble do it?

Actually, the 97 tax cuts did have an impact on the inflation of the tech bubble, and any bubble inflation means there must be a paired deflation...otherwise it isn't a bubble, is it. ;)

The tax cuts in 97 included capital gains tax cuts, which was one of the factors that fueled the skyrocketing venture capital investment shortly afterward. Many people responded with "irrational exuberance", investing capital into completely worthless ideas and startups with pie in the sky visions. A large part of that was simply due to the internet being a whole new paradigm that investors had not dealt with before, but the ease with which venture capital could be acquired did throw fuel on the fire. That does not mean that in the general case, low capital gains taxes will result in bubbles.

[TraneWreck]

I must be blind, because I sure don't see you (or anyone else) posting links to evidence in support of the premise that raising taxes does not reduce economic growth.

[...]

No more links before the money quote:

Yeah, I was responding to the limp, childish sarcasm contained in this:

"I guess you haven't fully read the thread. As opposed to simply asserting something, some people actually provide evidence."

You could have simply asked for support of the specific premise, but you chose sanctimony.


Where exactly is the evidentiary external link I'm supposed to look for that supports the assertion that increasing taxes don't retard economic growth?

Well, let's see:

In 1988, the tax rate on the top marginal bracket was 28%. It jumped slightly in '91-'92, but went to 39% in 1993. It basically stayed at that rate until the Bush tax cuts in 2003. There was a minimal tax cut in 1997, the only major change being a cut in capital gains. I would like to hear you explain how an 8% cut in capital gains is anywhere near as significant as an 11% increase in income tax on the top marginal bracket.

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States

Now, what happened to the US economy during that period?

http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg

Notice that the wealthy INCREASED their income after the tax increase.

But please, explain how the massive tax cuts and extensive deregulation (and lax enforcement of the regulations that weren't destroyed) in the 2000's helped the economy.

Edit: I should also point out that the big growth after WWII was coupled with INSANELY high taxes on the top marginal bracket. There were factors at play other than the tax rate (such as the total decimation of world competitors), but certainly the tax rate wasn't sufficient to hamper the growth.

[TraneWreck]

Actually, the 97 tax cuts did have an impact on the inflation of the tech bubble, and any bubble inflation means there must be a paired deflation...otherwise it isn't a bubble, is it. ;)

The tax cuts in 97 included capital gains tax cuts, which was one of the factors that fueled the skyrocketing venture capital investment shortly afterward. Many people responded with "irrational exuberance", investing capital into completely worthless ideas and startups with pie in the sky visions. A large part of that was simply due to the internet being a whole new paradigm that investors had not dealt with before, but the ease with which venture capital could be acquired did throw fuel on the fire. That does not mean that in the general case, low capital gains taxes will result in bubbles.

Sure, low taxes + minimal regulation will definitely promote that sort of bubble inflation. But there is more at play. The tech bubble required the tech, for example.

[MikeMangum]

Yeah, I was responding to the limp, childish sarcasm contained in this:

"I guess you haven't fully read the thread. As opposed to simply asserting something, some people actually provide evidence."

You could have simply asked for support of the specific premise, but you chose sanctimony.

Point taken. Sorry about that. In my defense, however, I had posted a rather extensive list of studies about that very issue, which you either didn't see or ignored, and posted an assertion that contradicted all of those studies with no evidence to back up your assertion.



Well, let's see:

In 1988, the tax rate on the top marginal bracket was 28%. It jumped slightly in '91-'92, but went to 39% in 1993. It basically stayed at that rate until the Bush tax cuts in 2003. There was a minimal tax cut in 1997, the only major change being a cut in capital gains. I would like to hear you explain how an 8% cut in capital gains is anywhere near as significant as an 11% increase in income tax on the top marginal bracket.

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States

Now, what happened to the US economy during that period?

http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg

Notice that the wealthy INCREASED their income after the tax increase.

But please, explain how the massive tax cuts and extensive deregulation (and lax enforcement of the regulations that weren't destroyed) in the 2000's helped the economy.

Edit: I should also point out that the big growth after WWII was coupled with INSANELY high taxes on the top marginal bracket. There were factors at play other than the tax rate (such as the total decimation of world competitors), but certainly the tax rate wasn't sufficient to hamper the growth.

There are alot of variables that contribute to economic growth, which is why regression analysis is useful. Like the regression analyses in the studies I linked to.

Post WWII was a special case. We happened to have the only major industrial base that hadn't been bombed to crap and had spent the past 5 years devoting a massive percentage of our GDP to building factories, tools and dies, and increasing shipping infrastructure like ports and railroad sidings. There was also alot of cargo ships and airplanes that were suddenly surplus and could be purchased for very good prices. Literally thousands of C-47s were sold and turned into commercial airliners (DC-3s) and they became the backbone of the commercial airline fleet for years. Hundreds of Victory and thousands of Liberty cargo ships were built (and several entire shipyards were built to build the ships) many of which were then sold off cheaply to shipping companies and formed the backbone of the shipping fleet for the next 10-15 years. Basically, WWII was a massive, enforced reduction in consumption and investment of capital, followed by a period of time in which the US was the only major industrial power with an intact industrial base. I don't think that tax rates played much part.

[TraneWreck]

There are alot of variables that contribute to economic growth, which is why regression analysis is useful. Like the regression analyses in the studies I linked to.

Post WWII was a special case. We happened to have the only major industrial base that hadn't been bombed to crap and had spent the past 5 years devoting a massive percentage of our GDP to building factories, tools and dies, and increasing shipping infrastructure like ports and railroad sidings. There was also alot of cargo ships and airplanes that were suddenly surplus and could be purchased for very good prices. Literally thousands of C-47s were sold and turned into commercial airliners (DC-3s) and they became the backbone of the commercial airline fleet for years. Hundreds of Victory and thousands of Liberty cargo ships were built (and several entire shipyards were built to build the ships) many of which were then sold off cheaply to shipping companies and formed the backbone of the shipping fleet for the next 10-15 years. Basically, WWII was a massive, enforced reduction in consumption and investment of capital, followed by a period of time in which the US was the only major industrial power with an intact industrial base. I don't think that tax rates played much part.

Sure, I agree with that. The point is that the high tax rate was not sufficient to defeat that growth. It doesn't prove that it spurned the growth, and I don't think it did in that specific case. The reasons you mentioned were far more important.

It's also worth noting that the massive amount of government funds dumped into the nation's industrial base--leading to, among other things, the airplane conversion you mentioned--aided tremendously in that growth. I don't mean to imply you argued otherwise, but there is a lot of "government never created a single job" stuff going around these days.